This paper proposes an econometric methodology to deal with life cycle earnings and mobility among discrete earnings classes. First, we use panel data on male log earnings to estimate an earnings function with permanent and serially correlated transitory components due to both measured and...

Recent development of explicit theoretical and empirical earnings functions from life cycle human capital investment models increases the potential to explain existing earnings distributions and to predict changes in it. The purpose of this paper is to suggest how these earnings functions can be...