Lecture2 - Human Capital I Lecture 2 Announcements Term...

Info iconThis preview shows pages 1–10. Sign up to view the full content.

View Full Document Right Arrow Icon
Human Capital I Lecture 2, January 17, 2012
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Announcements Term Paper Assignment will be distributed on Friday, January 20 th (in class) Remaining copies of Test 2 can also be picked up on Friday. 1
Background image of page 2
Review Compensating Differentials We developed the “Hedonic” model of wages across job-characteristics And implicitly, across markets for different types of “jobs.” The supply and demand sides of the market reflected that workers need to be compensated with higher wages for incurring the utility cost of the disamenity, while reducing disamenities is costly to firms. Supply side: Workers care about amenities (or disamenities); Can represent the tradeoff between amenities and wages for a worker by his/her indifference curves (utility function); Allow for heterogeneity of preferences. Demand side: It will be costly for firms to provide amenities (or provide fewer disamenties); Can represent the firm tradeoff (in terms of profits) between wages and amenities by the firm’s isoprofit curve; Allow for heterogeneity of technology Market Equilibrium: Efficient combinations of amenities and wages across firms. 2
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Equilibrium Market Wage-Disamenity Locus Wage Disamenity I 1 I 2 I 3 U 1 U 2 U 3 Equilibrium Wage – Disamenity Locus 3
Background image of page 4
Outline of Human Capital I Individual demand for education “Supply” of human capital to the labor market Why is there are return to education? Why doesn’t everyone acquire “maximum” education? Signaling and screening The market (versus individual) return to education Not much discussion of firm side of the market Estimating the returns to education The human capital earnings function OLS Estimation of the return to education Interpretation problems with OLS, and potential solutions Evidence on the return to schooling Training Theory Program Evaluation 4
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Discussion Why attend university? Why should there be a return to education? Is there a social rate of return to education that exceeds the private rate of return? 5
Background image of page 6
Explorations with the LFS I Usual hourly wages, by age and level of education: 6 10 15 20 25 30 35 40 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 Men Incomplete HS HS Grad Some PS University Grad
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Explorations with the LFS II Usual hourly wages, by age and level of education: 7 10 15 20 25 30 35 40 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 Women Incomplete HS HS Grad Some PS University Grad
Background image of page 8
Adam Smith’s view Basic idea also in The Wealth of Nations : When any expensive machine is erected, the extraordinary work to be performed by it before it is worn out, it must be expected, will replace the capital laid out upon it, with at least the ordinary profits. A man educated at the expense of much labour and time to any of those employments which require extraordinary dexterity and skill, may be compared to one of those expensive machines. The work which he learns to perform, it must be expected, over and
Background image of page 9

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 10
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 03/30/2012 for the course ECO 339 taught by Professor Mbaker during the Spring '11 term at University of Toronto.

Page1 / 35

Lecture2 - Human Capital I Lecture 2 Announcements Term...

This preview shows document pages 1 - 10. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online