Occupation Experience And Performance Determine Labor Income∗

Abstract

This paper studies the determinants of income of a group of professionals working in the College of Business of Lamar University in Beaumont, Texas. Occupation experience and performance determine income and the posi? tion in the income distribution of faculty members. Tinbergen (1947) has shown that the position a worker achieves in the distribution of incomes depends on the choice of occupation, which is only partly determined by aptitudes.1 Once an individual has chosen an occupation, he or she belongs to an exclusive or non-competing group, since moving from one occupation to another entails high and often prohibitive opportunity costs.2 The labor income of a member of an occupation and his/her position in the distribution of labor incomes is therefore tied to the average or representative income earned by the members of that occupation. However, a person's occupation does not determine exclusively his/her labor income because members of an occupation do not provide perfectly homogeneous services. Members differ in experience and performance, which determines not only differences in income within occupations but also the position each member holds in the distribution of other labor incomes. Discrimination by race, age and sex ? if present at all ? will further influence an individual's position in the distribution of labor incomes.