Capabilities, Allocation and Earnings

330 Pages·1992·5.72 MB·English

by  Joop Hartog (auth.)

Capabilities, Allocation and Earnings
Capabilities, Allocation and Earnings
Joop Hartog
University of Amsterdam
Springer Science+Business Media, LLC
Library 01 Congress Cataloging-in-Publication Oala
Harlog, Joop.
Capabililies, allocalion, and earnings / Joop Harlog.
p. cm.
Includes indexes.
ISBN 978-94-010-5320-4 ISBN 978-94-011-2972-5 (eBook)
DOI 10.1007/978-94-011-2972-5
,. Labor markel-Economelric models. 2. Division ollabor
-Economelric models. 3. Occupalional Iraining-Economelric models.
4. Income dislribulion-Econometric models 1. Tille.
HD5701.6.H37 1992
331.12'OI'5195-dc20 91-42546
CIP
Copyright © 1992 Springer Science+Business Media New YorK
Originally published by Kluwer Academic Publishers in 1992
Softcover reprinl of Ihe hardcover 1s i edilion 1992
AII rights reserved. No part of this publicatian may ba reproduced, stored in a retrieval system ar transmitted in any
lorm or by any means, mechanical, pholocopying, recording, or olherwise, wilhoul !he prior written permission 01 Ihe
publisher, Springer Science+Business Media, LLC.
Prinled on acid-tree paper.
To Tonny
CON TEN T S
Acknowledgements xi
1
INTRODUCTION
l.l Introduction 1
l.2 Key concepts used 3
l.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 18
Babbage and John Commons
2.3.1 Introduction 18
2.3.2 Integration or specialization? 21
2.3.3 The effect of learning: 31
increased dexterity
2.3.4 Implications 35
2.4 Working conditions 37
2.5 Labor demand in the short run 41
2.6 Concluding remarks 44
viii
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
ix
5.6 Concluding remarks 157
Appendix 5.1 The Brabant data
A5.l.l Organizing the sample 158
A5.l.2 Description of Brabant variables 160
A5.l.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
x
7.4 Allocation and the nature of the earnings 243
function
7.4.1 Linking earnings with the ordered 243
response model for allocation
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
ACKNOWLEDGEMENTS
The results reported in this book have evolved over a
number of years, and the material was developed in
different places, with a number of co-authors and guided
by individuals willing to read drafts of various papers
or to comment on presentations. Apart from work accom
plished in the Department of Economics of the Universiteit
van Amsterdam, I benefitted from summer visits to the
School of Education at Stanford, to the Department of
Economics at Queen's University in Kingston (Ont.),
Canada, and to the World Bank in Washington (Division of
Welfare and Human Resources). I am grateful to those who
helped organize these visits: Russel Rumberger, Hank
Levin, Robin Boadway, Jacques van der Gaag, as well as the
Fulbright Foundation. I am grateful to my co-authors
Herman Bierens, Hans van Ophem, Gerard Pfann, Geert
Ridder, Mun Tsang, Michael Visser and to Nick Vriend for
allowing me to use joint work, and I am grateful for the
work by research assistants: Hans van Ophem, Gerard
Pfann, Nick Vriend, Michael Visser, Ton op de Beke. Some
xii
gratitude shows in their rise to co-authorship. Kees
Molenaar deserves my gratitude for the work he did to
uncover the Brabant data.
Finally, I am grateful to the Nationaal Programma
Arbeidsmarkt Onderzoek (National Program Labor Market
Research) and the Organisatie voor Strategisch Arbeids
markt Onderzoek (Organization for Strategic Labor Market
Research) for funding many parts of the research. I have
received useful comments from anonymous referees to
journals, from attendants of a series of Econometric
Society Meetings, from participants in workshops in
Amsterdam, Rotterdam, Maastricht, Groningen, London
(Ont, Canada) , Kingston (Ont, Canada), Stanford, The
World Bank, Arhus (Denmark), Leuven, and from the follow
ing persons: Aldi Hagenaars, Wouter Keller, Glenn Mac
Donald, James McKinnon, Coen Teulings, Jules Theeuwes and
Jan Tinbergen. I hope they are not embarrassed by errors
I left. Last but not least, lowe special thanks to
Milada Gadourek for delivering an excellent manuscript
under sometimes complicated conditions.