Ch6(2)_Human Capital_鲍哈斯劳动经济学

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Very different policy implications


Government programs that subsidize on-the-job training and tuition expenses
Schooling as a Signal
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Private rate of return to schooling: increase in a worker’s earnings resulting from an additional year of schooling Social rate return to schooling: increase in national income resulting from an additional year of schooling
Schooling as a Signal
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If the firm pools all workers and treats them identically, “pooled equilibrium”

Average salary=weighted average of workers’ productivities Mismatching reduces firm’s efficiency and output. Earnings of high-productivity workers are dragged down by lowproductivity workers. ������������������������������������������ ������������������������������������������ = 200,000 × ������ + 300,000 × 1 − ������ = 300,000 − 100,000������
Review Question (#5-4)
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Suppose all workers have the same preferences represented by ������ = ������ − 2������
where w is wage and x is the proportion of the firm’s air that is composed of toxic pollutants. There are only two types of jobs in the economy: a clean job (x=0) and a dirty job (x=1). Let w0 be the wage paid by the clean job and w1 be the wage paid for doing the dirty job. If clean job pays $16 per hour, what is the wage in dirty jobs? What is the compensating wage differential?
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The schooling model is based on the idea that education increases a worker’s productivity and that this increase in productivity raises wages. An alternative argument is that education need not increase the worker’s productivity at all, but that “sheepskin” levels of educational attainment (e.g. diploma) signal a worker’s qualifications.
If signaling model is correct,


Private rate of return to schooling > 0 Social rate of return to schooling = 0

Although education may incorporate a signaling aspect, it is wellaccepted that education is more than a signal. Education is at least partially an investment in human capital.
Assumption: asymmetric information



Workers have different productivity, not observed by the firm. If employers could easily determine whether the worker is qualified for the job, the firm would not have to rely on third-party certifications.
Review Question (#6-2)
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Peter lives for three periods. He is considering three alternative educationwork options.
a.
Start work immediately, earn $100,000 in period1, $110,000 in period2, and $90,000 in period3.
Human Capital
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Workers are different
Schooling model



Maximize PV of lifetime earnings Wage-schooling locus Discount rate (r) = Marginal Rate of Return from schooling (MRR) Selection bias
b.
Spend $50,000 to attend college in period 1 and then earn $180,000 in periods 2 and 3.
Spend $50,000 to attend college in period1, receive PhD in period2 (no tuition), then earn $400,000 in period3.


$25,001 for low-productivituctivity worker

There could be a “separating equilibrium” if


Low-productivity workers choose not to obtain ������ years of education, voluntarily signaling their low productivity. High-productivity workers choose to get at least ������ years of schooling and separate themselves from the pack.


Schooling as a Signal
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Signaling model shows that education can play the role of signaling the worker’s ability without increasing the worker’s productivity. Both the schooling model and the signaling model predict that more education leads to higher earnings.
Last Week
Compensating Wage Differentials
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Jobs are different Worker: reservation price ⇒ supply Firm: wage differential vs providing safety ⇒ demand Equilibrium market wage differential
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Schooling as a Signal
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Equilibrium ������ that separates workers

Low-productivity worker will not attend college if: $200,000 > $300,000 – ($25,001 ∗ ������) High productivity worker will get ������ years of college if: $200,000 < $300,000 – ($20,000 ∗ ������) 3.999 < ������ < 5 Which ������ is the equilibrium? ⇒ smallest possible threshold
Hedonic wage function


Worker’s indifference curve Firm’s isoprofit curve Ability bias

Policy applications



Value of a statistical life Safety and health regulations Health insurance