Earnings, Education and Demographic Factors

Earnings are the most important component of income for individuals who are employed considering it as a major factor that determines the standard of living. The inequality in earning in the labour market is a major determinant of disparity in living standards because it influences the social circle among individuals. Employees with similar earnings will tend to feel in common with each other than those with vastly different earnings economic rewards and status. Understanding individual earnings gets at the very core of social science because it answers questions regarding the very foundations behind human well-being. Indeed comprehend the determinants of earnings helps policy makers develop tactics to promote wealth, to help ease poverty and eventually to put countries on a path to increased growth and prosperity.

This paper is written to assess the extent to which differences in the individual earnings of married males can be attributed to differences in education and demographic characteristics. The relationship between the differences (or inequality) in earnings and the process of economic development is one of the oldest and most frequently considered questions in the field of economic development. This paper focuses on issues that are frequently alleged to play an important role in accounting for earnings inequality, especially in less-developed countries labour market segmentation and social stratification.

Evidence from over the years on differences in earnings has been attributed entirely to skill differences. It was purported that those with productively identical skills will receive the same earnings in all employments.

Earnings function has been used widely to estimate the returns to education and training which has had a significant effect on this policy. Most of the early works have used a Minicerian approach that used years of schooling, work experience and the square of work experience as their core regressors.

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