This thesis investigates the relationship between age and earnings for men
and women in Australia, Great Britain and the United States. The facts for fulltime
workers in the three countries can be summarised in the following way:
1. There was greater variation in earnings with age in the US than in either of the
other countries. This was particularly apparent for men. In the US, 45 year old
men earned on average, 42 per cent more than 25 year old men while in Great
Britain, they earned 21 per cent more and in Australia, 13 per cent more.
2. Women’s earnings varied less with age than did men's in each country and
peaked much earlier than male earnings. At their peak in their early 30s, American
women's earnings were about 20 per cent above those of a 25 year old, in Great
Britain they were 8 per cent above a 25 year old’s and in Australia they were about
the same.
3. In each country, women's earnings varied less with age than did male earnings.
If we take the proportionate difference between male and female earnings at each
age between 16 and 64, the largest gap, relative to the gap at age 25, was between
men and women in Australia in their late 30s. The relative difference between men
and women in Australia was twice as large as in the other countries. There are a number of theories which have been put forward to explain why
earnings vary with age. This thesis considers some of the factors suggested as
being important; sex, experience in the workforce, education, industry of
employment, the level of unionisation in an industry and cohort size. Our results
show that within each country for both men and women, education, experience
and industry of employment are important determinants of earnings. The evidence
presented here is consistent, at least for men, with the hypothesis that higher levels
of unionisation in an industry are associated with flatter age earnings profiles than
in the less unionised industries. Our results on the effect of cohort size on earnings were less conclusive.
The earnings regressions for each country were used to decompose the
differences in the relative earnings by age into that part which can be attributed, at
least in an accounting sense, to endowments and that part which can be attributed
to coefficients or the rewards to these endowments. We found that differences in
both the stocks and the rewards to the basic human capital variables, education and
experience, were the major sources of differences between the countries in the
shapes of the age earnings profiles for both men and women. The evidence
presented here suggests that at least with respect to age earnings profiles for men,
the centralised system of wage determination in Australia has not led to very
different results than those found in Great Britain. However, the results for
women are consistent with the hypothesis that the Australian system has produced
flatter profiles than found in the other countries
