Schooling, work experience and earnings : a study of determinants of earnings in a Third World corporate setting

• The aim of the study is: (1) to investigate determinants of earnings in a Third World corporate setting; (2) to estimate the relative importance of these determinants; (3) to compare the determinants between different sectors; and (4) to provide some evidence concerning the validity of a number of economic theories. A Third World country (Liberia) and a corporate setting (LAMCO) are described. A synopsis of economic theories relevant in studying personal income distribution an determinants of earnings is made. A data-analytical study of determinants of earnings in this setting is carried out. A basic model and a segmented model are specified. The basic model, which includes eight variables, suggests nineteen hypotheses. Log Annual Earnings is the criterion variable. Key theoretical constructs in orthodox theory include Region, Sex, Age, Formal Education, Family Size, Work Experience, and Job Level. In segmentation theories, key theoretical constructs include the effect of labor market segmentation, group characteristics and membership, technology and micro-economic policies. The analysis involved descriptive and analytical statistics including path analysis. The significant features of the study are reported under three major headings: (1) the issue of group differences, and development; (2) the use of education and training as means for industrial and national development; and (3) policy implications serving equality and efficiency objectives. It was found that workers in the secondary labor sector (lower level jobs) face lower rewards to schooling (lower slope) than workers in the independent (higher level jobs) labor sector. At the departmental level, it was found that the marginal returns to an increase in the mean level of education are higher in the industrial departments with the lowest mean education. Finally, the study gives evidence of (1) a threshold effect of education, with an extremely limited payoff to primary education; and (2) that work experience and specific on-the-job training is a much more powerful predictor of earnings than formal education. 

Ämnesord

SAMHÄLLSVETENSKAP  -- Ekonomi och näringsliv (hsv//swe)

SOCIAL SCIENCES  -- Economics and Business (hsv//eng)

Nyckelord

Comparative education

Causal analysis

Determinants of earnings

Developing nations

Earnings functions

LAMCO

Liberia

Macroeconomic theories

Path analysis

Salary wage differentials

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