Capabilities, Allocation and Earnings / Edition 1

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The basic message of this book is that the labor market can be usefully interpreted as a confrontation of workers who have heterogeneous capabilities and tastes with jobs that are heterogeneous in the potential productivity of given individual capability endowments. On the demand side the model is used to analyze division of labor, while on the supply side it is used to study schooling decisions and the effects of schools on the resulting structure of the labor force. Equilibrium is characterized and some optimimum properties are studied before the empirical work is presented. The empirical work consists of models for the allocation of individuals to jobs and of earnings functions. The relation between the two is studied and some underlying characteristics of the functioning of labor markets are demonstrated.

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Product Details

  • ISBN-13: 9780792391739
  • Publisher: Springer Netherlands
  • Publication date: 2/29/1992
  • Edition description: 1992
  • Edition number: 1
  • Pages: 324
  • Product dimensions: 9.21 (w) x 6.14 (h) x 0.81 (d)

Table of Contents

1 Introduction
1.1 Introduction 1
1.2 Key concepts used 3
1.3 Organization of the book 10
2 Labor Demand
2.1 Introduction 13
2.2 The long run: designing the job structure 13
2.3 The ABC of labor division: Adam Smith, Charles Babbage and John Commons 18
2.3.1 Introduction 18
2.3.2 Integration or specialization? 21
2.3.3 The effect of learning: increased dexterity 31
2.3.4 Implications 35
2.4 Working conditions 37
2.5 Labor demand in the short run 41
2.6 Concluding remarks 44
3 Schooling and Supply
3.1 Introduction 47
3.2 Short run labor supply 49
3.3 Schooling in the smooth labor market 54
3.4 Schooling with constraints 68
3.4.1 Capability rationing 72
3.4.2 Imperfect information 77
3.5 Utility maximization 81
3.6 Conclusions 84
4 Equilibrium and Optimum
4.1 Introduction 91
4.2 The Lucas-Rosen model 92
4.3 The Tinbergen model 98
4.4 Comparative advantage 107
4.5 Optimal provision of job characteristics 122
4.6 Optimal schooling provisions 132
4.7 Conclusions 136
Appendix 4.1.: Derivatives of the Tinbergen model 139
5 Implications for Empirical Work
5.1 Introduction 141
5.2 Implications and predictions 142
5.3 Econometric models of selfselection 145
5.4 Estimating structural models 148
5.5 The Datasets 152
5.6 Concluding remarks 157
Appendix: 5.1 The Brabant data
A5.1.1 Organizing the sample 158
A5.1.2 Description of Brabant variables 160
A5.1.3 Analyzing non-response 164
Appendix: 5.2 The ARBI job level scale 173
Appendix: 5.3 The CBS job level scale 175
6 Allocation
6.1 Introduction 179
6.2 Multinomial logit models for allocation 181
6.2.1 The model 181
6.2.2 The effect of childhood variables 182
6.2.3 Schooling 187
6.2.4 Childhood and education combined 192
6.2.5 Some implications 196
6.3 An ordered response model for allocation 207
6.4 Concluding remarks 220
7 Earnings
7.1 Introduction 223
7.2 Education and job level 224
7.3 Earnings functions by job level 231
7.4 Allocation and the nature of the earnings function 243
7.4.1 Linking earnings with the ordered-response model for allocation 243
7.4.2 Simulating alternative allocations 254
7.5 Overeducation and underutilization 261
7.6 Conclusions 268
Appendix 7.1 Hay's model 269
8 Applications, Conclusions, Extensions
8.1 Introduction 277
8.2 Young Mediterraneans in the Dutch labor market 277
8.3 Self-selection in educational choice 282
8.4 An overview of results 288
8.5 To be continued 295
Appendix: Symbols Used 299
Notes 303
Name Index 319
Subject Index 322
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