What Explains Lifetime Earnings Differences Across Individuals?

from the Kansas Fed

– this post authored by Jose Mustre-del-R’o and Emily Pollard

Expected lifetime earnings are a key factor in many individual and institutional decisions. For example, deciding whether or not to go to college, what kind of occupation to pursue, and when and what kind of house to buy forces individuals to consider not just their earnings today but also their earnings expected over their lifetimes. Additionally, lifetime earnings play a key role in the design of government policies such as Social Security. Thus, given the importance of lifetime earnings for many individual decisions and government policies, understanding the factors that help explain differences in lifetime earnings across individuals is critical.

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