The Experience-Earnings Profile: Productivity-Augmenting or Purely Contractual? Evidence from the UK

We test the human capital interpretation of the experience-earnings profile. Does the upward sloping portion of the experience-earnings profile reflect on-the-job training which in turn causes the experience-productivity profile to slope upwards, or do purely contractual factors determine the nature of life-cycle earnings. Herein, we provide additional evidence on the relationship between productivity and earnings by examining earnings differentials in the UK academic labor market for economists. Using a test first suggested by Mincer, we find that the empirical results are consistent with human capital theory. We find that, although the positive relationship between earnings and experience persists when individual productivity measures are included in the salary equations for lecturers and senior lecturers, the positive relationship becomes statistically insignificant when the same productivity measures are included in the salary equations for professors. For lecturers and senior lecturers, the experience-salary profile properly reflects the structure of the national pay scale rather than variations in individual research productivity. At the professor level, where individual salaries are not determined by a pay scale, the data support the human capital explanation of the positive experience-earnings profile.

AN EMPIRICAL ASSESSMENT OF COMPUTER-ASSISTED DECISION ANALYSIS*

Decision analysis tools often are used in semistructured and ill-structured situations. While some researchers have argued that computerized decision analysis programs may improve decision quality in such situations, research support for this assertion is weak. In this laboratory study, business students used a computerized decision-analysis program with short strategic-management cases to prepare decision reports. Independent raters' perceptions of aided and unaided decision performance were contrasted, attitudes of students toward the program were assessed, individual differences were correlated with attitudes, and the program's impact on students' perceptions of their decision processes and performance was examined. Student attitudes toward the computerized aid were favorable, and individual differences in reactions generally were as predicted. However, the program did not improve the independent ratings of students' decision reports and recommendations. These findings suggest that computerized decision aids should be adopted cautiously. If such aids result in positive user affect and heightened decision confidence without corresponding improvements in decision quality, they may be dysfunctional. Rigorous research methodologies which incorporate independent evaluations of analyses and decisions are recommended for use in future research on computerized decision-analysis programs.     

SPECIFICATION AND ESTIMATION OF LOGICALLY CONSISTENT LINEAR MODELS

The implications of constrained dependent and independent variables for model parameters are examined. In the context of linear model systems, it is shown that polyhedral constraints on the dependent variables will hold over the domain of the independent variables when a set of polyhedral constraints is satisfied by the model parameters. This result may be used in parameter estimation, in which case all predicted values of the dependent variables are consistent with constraints on the actual values. Also, the implicit constraints that define the set of parameters for many commonly used linear stochastic models with an error term yield values of the dependent variables consistent with the explicit constraints. Models possessing these properties are termed “logically consistent”.     

SELECTING PARAMETERS FOR SHORT-TERM FORECASTING TECHNIQUES

The objective of this paper is to discover which of three forecasting modes used to select parameters for four short-term forecasting techniques minimizes errors. The study also examines whether the amount of historical data used to find parameters contributes to forecasting success. The results show the traditional one-ahead search routine works well in some, but not all, forecasting situations. Also, forecasting errors appear to decline when more historical data are included in the parameter search.     

Modeling population and subject-specific growth in a latent trait measured by multiple instruments over time using a hierarchical Bayesian framework

Psychometric growth curve modeling techniques are used to describe a person’s latent ability and how that ability changes over time based on a specific measurement instrument. However, the same instrument cannot always be used over a period of time to measure that latent ability. This is often the case when measuring traits longitudinally in children. Reasons may be that over time some measurement tools that were difficult for young children become too easy as they age resulting in floor effects or ceiling effects or both. We propose a Bayesian hierarchical model for such a scenario. Within the Bayesian model we combine information from multiple instruments used at different age ranges and having different scoring schemes to examine growth in latent ability over time. The model includes between-subject variance and within-subject variance and does not require linking item specific difficulty between the measurement tools. The model’s utility is demonstrated on a study of language ability in children from ages one to ten who are hard of hearing where measurement tool specific growth and subject-specific growth are shown in addition to a group level latent growth curve comparing the hard of hearing children to children with normal hearing.KEYWORDS: Bayesian hierarchical models, psychometric modeling, language ability, growth curve modeling, longitudinal analysis