Abstract
Economists contend that the shape of the earnings profile during years of work tenure is generated by job training investments. Increases in observed earnings result from on-the-job training investments defined as the difference between potential earnings and observed earnings. Calculations of the return to post-schooling investment and the time to recover investments have not been possible because potential earnings are not directly observable. In this paper a methodology is developed which permits estimates of potential earnings to be inferred from observations of earnings. Returns to post-school investment and the profile of observed earnings are then estimated.
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