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That regression (which is called a mincerian wage equation & economists have been running it for about 40 years) will give you the average percentage increase i

That regression (which is called a mincerian wage equation & economists have been running it for about 40 years) will give you the average percentage increase in earnings (if you do it in logs) from another year of education. That average measure can be consistent with lots of different dynamics---which is Mankiw's point. Perhaps another year of education increases earnings by 10% across the board (deterministic view) or perhaps is increase by 10% the chance that your income will increase 100% but 90% of the time does nothing. Note: All of this is just correlational---there are serious problems w/ treating these regressions as establishing causality, but that's another issue.

RockyMcNuts 15y ago
Mankiw's logic seems a little circular... education buys you the golden ticket, but then the process for determining the winners is stochastic. What determines the distribution of the stochastic process? If more people get educated, and the stochastic process stays the same, doesn't the distribution of outcomes stay the same? So in what sense is the distribution related to education? If in some areas network effects got more important, and Windows became ubiquitous, or Mankiw's textbook... and then industry got pretty powerful and able to defend the cash streams, without worrying about taxes or checks on market power... then the stochastic process became more winner-take-all.