Training_6

Training_6 - Wage Profiles Figure 9.3: Mean money earnings...

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1 Training and Wage Profiles Ch 9 pp. 153-157, 289-295 Wage Profiles Figure 9.3: Mean money earnings for ful-time, year-round male workers, 2003 (p. 289) Figure 9.4: Mean money earnings for ful-time, year-round female workers, 2003 (p. 290) Observations: 1. Average earnings of workers rise with level of education. 2. Rapid increase early – concave shape. 3. Profiles tend to fan out – larger returns to schooling later in worker’s life. 4. Profiles of men are more concave and fan out more than profiles of women. The first observation should be expected given our study of human capital and education. The last three observations can be explained in the context of on- the-job training. On-the-Job Training On-the-job training encompasses several ways in which workers can increase their human capital while employed: 1. Learning by Doing. 2. Informal Training – directions from a supervisor or coworker. 3. Formal Training – special programs and courses. Important assumption: during training, productivity is lowered. Who bears the cost of training? General Training General training is training that increases general human capital. General human capital increases the productivity of a worker at many different firms . Examples: – Ability to speak English. – Ability to use a word processor. – Ability to drive a truck. – Ability to make a website. Specific Training Specific training is training that increases specific human capital. Specific human capital increases the productivity of a worker at only one firm . Examples: – Ability to use a machine unique to one firm. – Knowledge of procedures unique to one firm. – Knowledge of how to deal with the individuals in a particular workplace. General and specific training are extremes. Most real life training is some combination of the two. Training Model Assumptions: 1. Worker works in two periods, 1 and 2. 2.
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This note was uploaded on 10/22/2008 for the course ECON 470 taught by Professor Yeonsookim during the Fall '08 term at Maryland.

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Training_6 - Wage Profiles Figure 9.3: Mean money earnings...

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