Explain what is meant by earning capacity. Further, provide an explanation for one of the earning capacity models (the explanation should not come directly from the book, it should be worded in your own words).
SOURCE:
Robinson, R. (2014). Foundations of Forensic Vocational Rehabilitation. New York, NY. Springer Publishing.
What is meant by Earning Capacity?
Student’s Name
Institutional Affiliation
What is meant by Earning Capacity?
In simple terms, earning capacity is the total amount of income that an individual who is willing and able to work should earn over a lifetime. While the term has existed for many decades, it only came to the fore in 1999 when Stephen Horner and Frank Slesnick discussed it in their paper. According to Horner and Slesnick, earnings capacity is the total projected income of a person who maximizes his prospects over earning streams (Skoog, 2014). Earnings capacity is highly subjective because it fails to incorporate non-cash acquisitions that increase the individual’s wealth. Nevertheless, most of the factors that influence a person’s earning streams are well detailed. They include a person’s skills and knowledge, practical ability, the opportunities available, and the freedom to make a choice of those opportunities. The term is relatively common in tort cases where people sue former employers for losses arising from accidents while at work.
There exist several earning capacity models. However, the most commonly used one is Field’s practical approach. According to Field, it is critical to have a practical approach to the assessment of earning capacity that incorporates the useful and widely accepted concepts that have emerged over the years. The model follows six basic steps. The first step involves formulating a pre-injury idea of earning capacity after a detailed review of case records. Second, the specialist involved should come up with a post-injury base wage. Specifically, this involves determining the individual’s residual capacity after injury and then identifying jobs that the client can do and earn wages. Third, the specialist should approximate the variance between the client’s pre-injury earning capacity and post-injury earning capacity. The next step involves determining the remaining work life of the individual. Fifth, the assessor should multiply the client’s remaining work life with the pre-earning and post-earning capacity variance. Lastly, one should translate the resultant figure to its present value.

References
Skoog, G. R. (2014). Earning capacity and economic theory. NAFE, 1-39.

Explain what is meant by earning capacity. Further, provide an explanation for one of the earning capacity models (the explanation should not come directly from the book, it should be worded in your own words).
SOURCE:
Robinson, R. (2014). Foundations of Forensic Vocational Rehabilitation. New York, NY. Springer Publishing.
What is meant by Earning Capacity?
Student’s Name
Institutional Affiliation
What is meant by Earning Capacity?
In simple terms, earning capacity is the total amount of income that an individual who is willing and able to work should earn over a lifetime. While the term has existed for many decades, it only came to the fore in 1999 when Stephen Horner and Frank Slesnick discussed it in their paper. According to Horner and Slesnick, earnings capacity is the total projected income of a person who maximizes his prospects over earning streams (Skoog, 2014). Earnings capacity is highly subjective because it fails to incorporate non-cash acquisitions that increase the individual’s wealth. Nevertheless, most of the factors that influence a person’s earning streams are well detailed. They include a person’s skills and knowledge, practical ability, the opportunities available, and the freedom to make a choice of those opportunities. The term is relatively common in tort cases where people sue former employers for losses arising from accidents while at work.
There exist several earning capacity models. However, the most commonly used one is Field’s practical approach. According to Field, it is critical to have a practical approach to the assessment of earning capacity that incorporates the useful and widely accepted concepts that have emerged over the years. The model follows six basic steps. The first step involves formulating a pre-injury idea of earning capacity after a detailed review of case records. Second, the specialist involved should come up with a post-injury base wage. Specifically, this involves determining the individual’s residual capacity after injury and then identifying jobs that the client can do and earn wages. Third, the specialist should approximate the variance between the client’s pre-injury earning capacity and post-injury earning capacity. The next step involves determining the remaining work life of the individual. Fifth, the assessor should multiply the client’s remaining work life with the pre-earning and post-earning capacity variance. Lastly, one should translate the resultant figure to its present value.

References
Skoog, G. R. (2014). Earning capacity and economic theory. NAFE, 1-39.