The Meaning of Earning Capacity

  • Stephen Horner
  • Frank Slesnick


Earning capacity is a legal term used by most courts in personal injury cases to designate economic losses due to the impairment of the ability to earn money in personal injury cases. Loss of earning capacity is distinguished from a loss of actual or expected earnings. Earning capacity is the expected earnings of a worker who chooses to maximize the expected present value of future actual earnings, while expected earnings are the expected values of actual earnings. The chapter reviews the legal and economic bases for the earning capacity standard of loss, relying on supply, and demand analysis. In addition, the article provides principles that guide the evaluation of earning capacity both prior to and after an injury.


Actual Earning Earning Capacity Latent Capacity Expected Earning Hardware Store 
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Cases Cited

  1. Barto v. Shore Construction, 2015 U.S. App. LEXIS 15810 (5th Cir.) 9/4/2015Google Scholar
  2. DeWeert v. Stevedoring Services of America, 272 F.3d 1241 (9th Cir.) 11/29/2001Google Scholar
  3. Johnson v. Penrod Drilling Company, 510F.2d 234 (5th Cir.) 1975Google Scholar
  4. Madore v. Ingram, 732 F.2d 475 (5th Cir.) 5/24/1984Google Scholar

Copyright information

© The Author(s) 2016

Authors and Affiliations

  • Stephen Horner
    • 1
  • Frank Slesnick
    • 2
  1. 1.Economic ConsultingCorpus ChristiUSA
  2. 2.Rubel School of BusinessBellarmine UniversityLouisvilleUSA

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