Showing papers on "Human capital published in 1981"

Occupational self-selection: a human capital approach to sex differences in occupational structure.

Abstract: A rich and diverse literature exists concerning the distribution of labor incomes. One approach namely that of human capital concentrates on lifetime accumulation paths of "earnings capacity units" (human capital). Individual variations in human capital imply differences in earnings power thereby yielding strong implications concerning earnings distribution within a population. Despite its explanatory power the human capital model has been widely criticized. One criticism centers on its inability to obtain inferences concerning occupational distribution. The purpose of this paper is to alleviate at least some such criticism by applying the hedonic price approach so as to embed occupational choice into the human capital framework. The significance is that neoclassical economic theory can be used to obtain implications concerning the determinants of occupational structure. (excerpt)

Firm-Specific Human Capital as a Shared Investment

Abstract: The standard analysis of firm-specific human capital argues that the cost of and the return to the investment will be shared by the worker and the employer. By sharing the investment, the parties reduce the likelihood of either party unilaterally terminating the employment relationship and imposing on the other party a loss in his return. This argument, originally advanced by Gary Becker (pp. 10-15), has become accepted almost as a theorem.' The sharing decision is particularly important in determining the shape of the wage profile and the behavior of labor turnover in the labor market. The exact decision process involved in determining the sharing arrangement, however, appears to have received little attention in the literature.2 In this paper, a formal statement of the sharing model is presented. The model allows a systematic analysis of the incentive to share the investment in firm-specific human capital. My analysis reveals that whether or not the investment is shared depends on the existence in the post-investment years of costs of evaluating and agreeing on the worker's productivities in the firm and elsewhere. This paper and two others (my 1979 article and my article with Ben Yu) demonstrate the usefulness of the sharing model. My 1979 article develops and tests the hypothesis that the ubiquitous bonus payments in Japan can be understood as payments for the returns to firm-specific human capital. The paper with Yu extends the analysis of firm-specific human capital by considering the incentives for introducing wage flexibility in employment contracts. Various dismissal and quitting rules are also compared in that paper. In this paper, I use the model in its simplest form to offer a formalization of Becker's hypothesis concerning the sharing of the gains and costs of specific training. In so doing, I demonstrate that the Becker hypothesis can be viewed as a direct application of the Coase Theorem. Implications of the model for the experience-earnings profile are also discussed. This paper also clears up some confusion in the literature about the validity of the sharing hypothesis (see fn. 1).

Returns to education : an updated international comparison

Abstract: The question of the profitability of investing in human capital remains controversial. Three main methods for estimating the rate of return to investment in education are described: the elaborate method, the earnings function method, and the short-cut method. Application of cost-benefit analysis measures in 44 countries yields four patterns that have important policy implications: (i) top priority should be given to primary education as a form of human resource investment due to high returns, both social and private; (ii) secondary and higher education should also be pursued in a program of balanced human resource development; (iii) the larger discrepancy between the private and social returns in higher education indicates room for private finance at the university level; and (iv) falling returns to education that result as a country develops and/or the capacity of its educational system expands are minimal under time-series analysis and do not warrant abandonment of educational expansion.

Are those paid more really more productive? the case of experience*

Abstract: This study uses computerized personnel microdata on the white male managerial and professional employees at a major U.S. corporation to address the following question: Can the additional earnings which are associated with more labor market experience at a point in time really be explained by higher productivity at the same point in time? Our answer to this question, based on both cross-sectional and longitudinal information, is that performance plays a substantially smaller role in explaining cross-sectional experience-earnings differentials and earnings growth than is claimed by those who have adopted the human capital explanation of the experience-earnings profile. This response depends critically on our assumption that the performance ratings which supervisors give to their white male managerial and professional subordinates adequately reflect the subordinates' relative productivity in the year of assessment; we present a great deal of evidence which strongly supports this assumption.

Labor Mobility and Wages

Abstract: In this essay we explore the implications of human capital and search behavior for both the interpersonal and life-cycle structure of inter-firm labor mobility. The economic hypothesis which motivates the analysis is that individual differences in firm-specific complementarities and related skill acquisitions produce differences in mobility behavior and in the relation between job tenure, wages and mobility. Both "job duration dependence" and "heterogeneity bias" are implied by this theory. Exploration of longitudinal data sets (NLS and MID) which contain mobility, job and wage histories of men in the 1966-76 decade yield several findings, among others: 1. The initially steep and later decelerating declines of labor mobility with working age are in large part due to the similar but more steeply declining relation between mobility and length of job tenure. 2. Given tenure levels, the probability of moving is predicted positively by the frequency of prior moves and negatively by education. The inclusion of prior moves in the regression reduces the estimated tenure slope because it helps to remove the "heterogeneity bias" in that slope. 3. The popular "mover-stayer model" is rejected by the existence of tenure effects on mobility. 4. Differences in mobility during the first decade of working life do not predict long-run differences in earnings. However, persistent movers at later stages of working life have lower wage levels and flatter life-cycle wage growth. 5. The analysis calls for a reformulation of earnings (wage) functions. Inclusion of tenure terms in the function permits separate estimates of returns to general and specific human capital after correction for heterogeneity bias. A rough estimate is that 50 percent of life-time wage growth is due to general (transferable) experience and 25 percent each to firm-specific experience and inter-firm mobility.

Human Capital and Economic Growth

Abstract: Individuals differ in both inherited and acquired abilities, but only the latter differ among countries and time periods. Human capital analysis deals with acquired capabilities which are developed through formal and informal education at school and at home, and through training, experience, and mobility in the labor market. Just as accumulation of personal human capital produces individual economic (income) growth, so do the corresponding social or national aggregates. At the national level, human capital can be viewed as a factor of production coordinate with physical capital. This implies that its contribution to growth is greater the larger the volume of physical capital and vice versa. The framework of an aggregate production function shows also that the growth of human capital is both a condition and a consequence of economic growth. Human capital activities involve not merely the transmission and embodiment in people of available knowledge, but also the production of new knowledge which is the source of innovation and of technical change which propels all factors of production. This latter function of human capital generates worldwide economic growth regardless of its initial geographic locus. Contrary to Malthus, economic growth has not been eliminated by population growth. Indeed, spatial and temporal patterns of the "demographic transition" appear to be congruent with economic growth. Human capital is a link which enters both the causes and effects of these economic-demographic changes.

Human Capital and Economic Growth

Abstract: Individuals differ in both inherited and acquired abilities, but only the latter differ among countries and time periods Human capital analysis deals with acquired capabilities which are developed through formal and informal education at school and at home, and through training, experience, and mobility in the labor market Just as accumulation of personal human capital produces individual economic (income) growth, so do the corresponding social or national aggregates At the national level, human capital can be viewed as a factor of production coordinate with physical capital This implies that its contribution to growth is greater the larger the volume of physical capital and vice versa The framework of an aggregate production function shows also that the growth of human capital is both a condition and a consequence of economic growth Human capital activities involve not merely the transmission and embodiment in people of available knowledge, but also the production of new knowledge which is the source of innovation and of technical change which propels all factors of production This latter function of human capital generates worldwide economic growth regardless of its initial geographic locus Contrary to Malthus, economic growth has not been eliminated by population growth Indeed, spatial and temporal patterns of the "demographic transition" appear to be congruent with economic growth Human capital is a link which enters both the causes and effects of these economic-demographic changes

On the Role of Social Security as a Means for Efficient Risk-Bearing in an Economy Where Human Capital Is Not Tradeable

Abstract: An intertemporal general equilibrium model of an economy with overlapping generations and two factors of production, labor and capital, is used to analyze the economic inefficiencies caused by the non- tradeability of human capital -and to derive a constrained pareto-optimal sys tern of taxes and transfers which "c.orrectS1 these inefficiencies. It is shown that, in the absence of such a system, this market failure causes the equilibrium path of the economy to deviate from the optimum for two reasons: First, as is well known, people cannot achieve their optimal lifecycle consumption program because early in life when most of their wealth is in the form of human capital, they cannot consume as much as they would otherwise choose. Second, investors cannot achieve an optimal portfolio allocation of their savings. Not only will some investors be forced to bear more risk than they would choose in the absence of this market failure, but because factor shares are uncertain, the portfolios held by investors will be inefficient. The young are "forced" to invest "too much" of their savings in human capital and the old are "forced" to invest "too little" in human capital. Hence, all investors bear "factor-share" risk which if human capital were tradeable, could be diversified away. It is shown that a optimal system of taxes and transfers not unlike the current Social Security system can eliminate this inefficiency, and therefore, it is suggested that a latent function of the present system may be to improve the efficiency of risk-bearing in the economy.

Expected Interruptions in Labor Force Participation and Sex Related Differences in Earnings Growth

Abstract: The paper analyzes the joint determination of wives' earnings and labor force participation over the life cycle given the interruptions in wives' work careers. The interruptions affect the profitability of the investment in human capital, which in turn determines earnings. The earnings prospects feed back into the participation decision, namely, the decision whether and for how long to drop out of the labor force. The formal analysis compares the age-earnings profiles of persons who drop out of the labor force with those who do not during the pre- and post-interruption period. The comparison is carried out where interruptions are assumed to be exogenous and when they are endogenous. The effect of productivity at home, the initial stock of human capital and its rental value on the length of the interruption is investigated.

Self selection in the labor market

Abstract: Often models of labor markets have assumed that firms know the productivity of all appplicants and pay wages proportionate to those productivities. In the presence of heterogeneity among the labor force and imperfect information by employers, this assumption is overly strong. A more common practice is for firms to offer a wage for a given job classification, and to test applicants to try to ensure a minimal level of performance.' The tests used by employers typically include a trial hiring period during which the applicant's performance is carefully monitored as well as perusual of the applicant's education record, previous job experience, and behavior during an interview. Since tests are costly to administer, inaccurate, and imprecise, firms try to discourage applications from workers who do not meet their hiring standards. One way of discouraging the less qualified is to require applicants to pay a fee for being tested.2 Imposing a cost for being tested discourages applications from individuals who believe their probability of passing the examination is low (as well as from poorer individuals if the marginal utility of income is decreasing). The use of an application fee has the effect of converting a one-part test into a two-part test; only workers who both perceive their probability of passing the test to be high and who actually pass the test are hired. For example, if an apprenticeship program is viewed as a test, then below-market wages during the apprenticeship discourage applications from workers who would be less likely to successfully complete their apprenticeships (those workers who successfully finish the apprenticeship program will receive an increase in their wages). The difference between an applicant's wage in the training program and the wage he could obtain elsewhere is the fee for being tested.3 This interpretation of apprenticeship implies that wages increase with job tenure, not because of the acquisition of human capital, but rather as a consequence of the combination of tests and wages to sort workers. The debate here is similar to that over sorting versus human capital theories of education; however, by focusing on sorting versus human capital explanations of low-wage apprenticeships, we can more readily generate testable hypotheses which distinguish between the two models. For example, the human capital approach predicts that productivity per manhour increases with job tenure, while a pure sorting model predicts that, for individual workers, their productivity is independent of their job tenure.4 *University of California-San Diego and Bell Laboratories, respectively. We benefited from illuminating conversations with Joseph Stiglitz. We also wish to thank Peter Fishburn, Bruce Greenwald, Henry Landau, Ed Zajac, and George Borts for helpful comments. The beginning of this research program was supported by a Sloan Foundation grant for Weiss. Work was continued while Guasch was a Research Fellow at CORE, Universite Catholique de Louvain, Belgium. Issues of productivity differences among workers paid a uniform wage has been discussed by Melvin Reder (1955, 1969), William Brown, and Weiss (1976), among others. 2 One potential difficulty with this test-cum-fee strategy is that firms may have an incentive to take the fees and announce that workers have failed, without testing them, i.e., "take the money and run." In our model this problem can be ignored since firms, in general, are making positive profits. If they renege on their explicit contract to test applicants and hire those who pass, they would not attract future applicants and would find the expected value of their stream of profits to have fallen. In cases where reneging on contracts is profitable, we would expect legal instruments to arise to enforce contracts. 3Although, in principle, the screening mechanisms available to firms are numerous, we will focus specifically on the use of testing strategies, with or without application fees. The nontesting strategies, where the firm uses the wage offered as a means of maximizing labor input per dollar, have been analyzed in our 1980b article and by Weiss (1980). 4Of course, measurements of the average productivity of workers may show increases with job tenure if the

Expected Interruptions in Labor Force Participation and Sex Related Differences in Earnings Growth

Abstract: The paper analyzes the joint determination of wives' earnings and labor force participation over the life cycle given the interruptions in wives' work careers. The interruptions affect the profitability of the investment in human capital, which in turn determines earnings. The earnings prospects feed back into the participation decision, namely, the decision whether and for how long to drop out of the labor force. The formal analysis compares the age-earnings profiles of persons who drop out of the labor force with those who do not during the pre- and post-interruption period. The comparison is carried out where interruptions are assumed to be exogenous and when they are endogenous. The effect of productivity at home, the initial stock of human capital and its rental value on the length of the interruption is investigated.

Self-Selection in the Labor Market

Abstract: Often models of labor markets have assumed that firms know the productivity of all appplicants and pay wages proportionate to those productivities. In the presence of heterogeneity among the labor force and imperfect information by employers, this assumption is overly strong. A more common practice is for firms to offer a wage for a given job classification, and to test applicants to try to ensure a minimal level of performance.' The tests used by employers typically include a trial hiring period during which the applicant's performance is carefully monitored as well as perusual of the applicant's education record, previous job experience, and behavior during an interview. Since tests are costly to administer, inaccurate, and imprecise, firms try to discourage applications from workers who do not meet their hiring standards. One way of discouraging the less qualified is to require applicants to pay a fee for being tested.2 Imposing a cost for being tested discourages applications from individuals who believe their probability of passing the examination is low (as well as from poorer individuals if the marginal utility of income is decreasing). The use of an application fee has the effect of converting a one-part test into a two-part test; only workers who both perceive their probability of passing the test to be high and who actually pass the test are hired. For example, if an apprenticeship program is viewed as a test, then below-market wages during the apprenticeship discourage applications from workers who would be less likely to successfully complete their apprenticeships (those workers who successfully finish the apprenticeship program will receive an increase in their wages). The difference between an applicant's wage in the training program and the wage he could obtain elsewhere is the fee for being tested.3 This interpretation of apprenticeship implies that wages increase with job tenure, not because of the acquisition of human capital, but rather as a consequence of the combination of tests and wages to sort workers. The debate here is similar to that over sorting versus human capital theories of education; however, by focusing on sorting versus human capital explanations of low-wage apprenticeships, we can more readily generate testable hypotheses which distinguish between the two models. For example, the human capital approach predicts that productivity per manhour increases with job tenure, while a pure sorting model predicts that, for individual workers, their productivity is independent of their job tenure.4 *University of California-San Diego and Bell Laboratories, respectively. We benefited from illuminating conversations with Joseph Stiglitz. We also wish to thank Peter Fishburn, Bruce Greenwald, Henry Landau, Ed Zajac, and George Borts for helpful comments. The beginning of this research program was supported by a Sloan Foundation grant for Weiss. Work was continued while Guasch was a Research Fellow at CORE, Universite Catholique de Louvain, Belgium. Issues of productivity differences among workers paid a uniform wage has been discussed by Melvin Reder (1955, 1969), William Brown, and Weiss (1976), among others. 2 One potential difficulty with this test-cum-fee strategy is that firms may have an incentive to take the fees and announce that workers have failed, without testing them, i.e., "take the money and run." In our model this problem can be ignored since firms, in general, are making positive profits. If they renege on their explicit contract to test applicants and hire those who pass, they would not attract future applicants and would find the expected value of their stream of profits to have fallen. In cases where reneging on contracts is profitable, we would expect legal instruments to arise to enforce contracts. 3Although, in principle, the screening mechanisms available to firms are numerous, we will focus specifically on the use of testing strategies, with or without application fees. The nontesting strategies, where the firm uses the wage offered as a means of maximizing labor input per dollar, have been analyzed in our 1980b article and by Weiss (1980). 4Of course, measurements of the average productivity of workers may show increases with job tenure if the

Human Capital and Covenants Not to Compete

Abstract: THE common law does not generally enforce contracts in restraint of trade. An exception is made, however, for certain restrictive covenants. One class of such covenants are those signed by an employee who agrees not to compete with his employer for a period of time after termination of employment. Common law judges seemed to view these contracts as creating monopoly power, which was, however, justified by other interests. Stigler, in his analysis of such covenants, also assumes that monopoly power (of masters, in master-apprentice contracts) is the relevant feature.' This paper will argue that such contracts were not based on monopoly power, but served different functions. In particular, restrictive covenants were and are necessary in some circumstances to lead to efficient amounts of investment in human capital. Moreover, we will examine the behavior of courts in enforcing such contracts to ascertain if enforcement may be viewed as efficient, in the sense that much of the common law may be considered efficient. In his seminal work on human capital, Gary Becker has distinguished between \"general\" and \"specific\" on the job training.2 \"General training is useful in many firms besides those providing it.\"3 \"Training that increased productivity more in firms providing it will be called specific training.\" 4 The concept of human capital has been one of the most fruitful

Perceived Earnings Functions and Ex Ante Rates of Return to Post Compulsory Education in England.

Abstract: This article offers a direct empirical test of one of the main tenets of the human capital model. It shows that by the end of their compulsory education English pupils in general are aware of the relationship between educational qualifications and average earnings. For the first time in Britain direct calculations are made of ex ante perceived rates of return to upper secondary and higher education. The perceived rates correspond closely to the actual rates estimated by earlier studies. The article also provides useful evidence of differences between social classes and ability groups. In particular it shows that the human capital model offers a much less satisfactory explanation of the behaviour of low ability and working class pupils than it does of high ability and middle class pupils.

Alternative Models of Earnings Determination and Labor Market Structures

Abstract: There are three distinct research traditions in the analysis of individual earnings determination: human capital, or earnings function, analyses; aggregate wage analyses; and labor demand analyses. An important and incongruous aspect of each is the treatment of geographical differences in labor markets. This paper first investigates the magnitude and character of geographical wage differentials. The sizable differences discovered there are then related to the existing, and highly simplified, models of labor market differences. While the two major classes of models (compensating differentials and labor demand) differ significantly in assumptions and implications, it is impossible to distinguish adequately between them. There appears to be a clear need for more structural analyses of labor market operations.

The returns to education : increasing with experience or decreasing with expansion

Abstract: This paper explores the relationship between education and employment, specifically the tendency for the coefficient on education to depend on the length of employment experience. A case study of Tanzania, an economy with a low average level of education among employees, a rapid expansion of the educational system in the years prior to the survey, and an inflexible labor market, is used for the examination. The analysis supports the hypothesis that education and employment experience do have an interactive effect on earnings. Additionally, the study observes a process of filtering down in Tanzania, i.e. as education has expanded, so educated entrants to the labor market have accepted lesser jobs. This filtering down might explain the evidence in light of the role that occupation plays in the determination of earnings.

Human Capital Accumulation in Premodern Rural Japan

Abstract: Premodern human capital accumulation helps to explain the exceptional growth performance of the Japanese economy in the last hundred years. Prior to this century informal institutions were more important for human capital formation than were the more formal ones familiar today. This paper examines a few seminal changes—national market formation, population control, and the involvement of farmers in rural administration—that were primarily responsible for the emergence of economically responsive, more productive individuals in rural Japan.

The Implications of the Economic Theory of Human Capital for Personnel Management

Abstract: Research in labour economics during the past several years has led to the development of the theory of human capital. This theory deals with a variety of issues concerning the productivity of people as the result of their human capital.

Factor Endowments, Factor Proportions, and the Allocative Efficiency of U.S. Interregional Trade

Abstract: THE Heckscher-Ohlin (H-O) theory of trade has been subjected to numerous international tests.' Based upon the empirical evidence presented in the literature, it appears that the theory's explanatory power of the actual pattern of international trade is somewhat limited. This may not be surprising, however, when one considers a host of extraneous factors such as tariffs, quotas, and other policy and institutional barriers to trade which distort the pattern of trade. On the other hand, some of the requisites of the H-O theory are more nearly satisfied in interregional trade within a nation. The extent of policy distortions on the overall pattern of commodity trade should be far less in interregional trade than in international trade. Likewise, both production technologies and demand conditions, assumed to be identical between nations in the H-O theory, should be more nearly so among regions within a nation, while the theoretical basis of regional trade is, of course, the same as that of international trade. It is primarily for these reasons that a number of researchers have more recently turned to interregional trade for the purpose of testing the H-O theory. The current literature on the U.S. regional comparative advantage includes the contributions by Moroney and Walker (1966), Moroney (1972, 1975), Estle (1967), and Klaasen (1973). Whereas these studies focused primarily on the pattern of regional production as revealed by value-added concentration ratios for the U.S. South, the major objectives of this paper are (i) to design and perform factor-proportion tests based upon the actual interregional pattern of trade, and (ii) to investigate one neglected empirical aspect of the H-O theory bearing upon the substitutive role that commodity trade plays for direct factor mobility. In section II, we present estimates of the regional distribution of major input supplies in the United States. The input classes considered are capital equipment, human capital, labor, and renewable and nonrenewable natural resources. In particular, we have found that there are fairly distinct differences among U.S. census regions pertaining to relative aggregate input supplies defined by physical capital/labor ratio, human capital/labor ratio, renewable natural resource! labor ratio, and nonrenewable resource/labor ratio. Section III presents the methodology and major empirical findings of the factor-proportions test as adapted to interregional trade. Section IV extends the analysis to consider an alternative hypothesis of the H-O theory based on the substitutive relationship between direct factor movements and commodity trade as embedded in the original H-O theory. This aspect of the theory has not been explicitly dealt with in the empirical literature, and we consider its practical implication concerning the allocative efficiency of trade. A summary section concludes the paper.

Education as an Option.

Abstract: To the student, education provides many benefits. In part, education produces human capital. By attending school and training on the job, the student acquires marketable skills, thereby sacrificing current labor income while augmenting future labor income. Among economists this concept is familiar. Beginning with the seminal work by Mincer (1958) and Becker (1964), models of the accumulation of human capital have been extended to the life cycle and, more recently, to uncertainty.' Simultaneously, several of these models have been tested empirically.2 To economists, education also serves as a signal. By completing a demanding educational program, the student signals to prospective employers that he possesses greater innate productivity than other potential employees not completing similar programs. This potentially greater productivity the employer then rewards with more favorable conditions of employment,

The Regulation of Occupations and the Earnings of Women

Abstract: In this paper, a human capital model is used to investigate the effects of occupational licensing and occupational certification on the wage rates of individual women. When we analyzed micro data available from the National Longitudinal Surveys of mature and young women, we found that licensed women earn about 20 percent more per hour after controlling for personal characteristics, regional location, human capital factors, and occupational category. No statistically significant premium was found for certified women.

Back to beginnings: Credentialism, productivity, and Adam Smith's division of labour

Abstract: The aim of this article is to examine critically—through a review of human capital and screening theories—the foundation of factional pressures for upgrading educational credentials in the labour market. The article refers back to the writings of Adam Smith to show that not only do the claims of the beneficial and productive social effects of educational upgrading need questioning but that these have been so questioned for more than 200 years.

The labor supply and fertility behavior of married women: a three-period model.

Abstract: By emphasizing the importance of dividing the family life cycle into various stages for the analysis of fertility and female labor supply this discussion adds to the literature on female time allocation. This is a period analysis in which the life cycle is divided into 3 stages: the pre-1st birth interval the childrearing stage and a final period that begins when all the children have reached school age. As far as is known this study is the first about life cycle phenomenon in which life cycle stage is distinguished by the presence and age of children. Previous studies represent life cycle stage by age usually of the mother. The presence and age of children at least with regard to female labor supply decisions is considered as a more signifiant indicator of where a family is in its life cycle. A 3-period theoretical model is presented for the analysis of fertility behavior female investment in human capital labor supply and wages. This gives a general framework within which to analyze the interactions among these various aspects of family decision making. Several simplifying assumptions are made in order to reduce the problem to manageable proportions. The focal point of the model is the wife; the possible endogeneity of many of the husbands actions is neglected. Data from the 1973 National Survey of Family Growth were used to examine empirically the determinants of fertility and female work. The sample was restricted in several ways. Only women who were formally married with at least 1 child and in the 3rd stage of the life cycle at the time of the survey were considered. All of those cases in which the wife had been married more than once as well as those in which twins or adopted children were reported were eliminated. The sample size was 1485. The results show that the influence of exogenous variables on the female labor supply varied substantially among the life cycle stages. The husbands income has no impact on the wifes market work in the pre-1st birth interval but it has a significantly negative effect in the subsequent stages. With the exception of pre-marriage period in which investment in human capital and market work were competing activities the wifes education was a potent force affecting labor supply. Estimates suggest that this variable has the strongest positive influence prior to the birth of the 1st child. With some qualifications the wifes education was a more important determinant of both market activity and fertility than the husbands income. The association between fertility and female employment varied in sign across stages.

Fertility and Female Labor-Force Participation: Estimates and Projections for Austrian Women Aged 20-30

Abstract: The sharp and unexpected decline in fertility rates during the 1960s and 1970s provoked a great deal of controversy. What was the cause of this decline? What will be its future path? There were two opposing schools in this debate: Becker and the "human capital" school on one side and Easterlin and his school on the other. The former emphasized that the rise in women's real wage rates drove up the opportunity cost of having children, whereas the latter emphasized the age structure of the population. This paper presents these two lines of thought and constructs a model with ingredients from both schools. In this model the decision of having children or of entering the labor force is considered as a simultaneous one. Therefore the model tries to explain simultaneously the fertility rate and the labor-force participation rate. This structural model is then estimated for Austrian women aged 20-30 with a system estimator that takes into account the simultaneity in the model. These estimates together with some assumptions about exogenous variables are used to give some projections to the year 2000 for the endogenous variables, the fertility rates and the labor-force participation rate of women aged 20-30.

Training Costs and Wage Differentials in the Theory of Job Competition

Abstract: A labor market is considered that is characterized by job competition over job ladders Firms paying more for comparable jobs can attract workers with better background characteristics (with general human capital) and will lose fewer trained workers (with general and firm-specific human capital) Optimizing behavior on the side of the firms gives rise to a wage structure that shows similar correlations between training and wages as would emerge in a human capital framework, but for different reasons Further, the wage structure responds to other influences, like the degree of labor mobility

Economics and International Relations: A Conceptual Framework

Abstract: mathematics and quantitative techniques. Capital theory has been transformed as we broadened it to include human capital, with all the new insights this more inclusive concept has provided to the theory of income distribution, trade theory, and the theory of economic development (Schultz 1964, Becker). We have revitalized our insights into the family and the household with the new household economics, rooted in the insights of Becker and Lancaster but going back at least to Margaret Reid. We are constructing a microeconomic base for our macroeconomic theory. We have reincorporated the "political" into political economy. And we finally are beginning to recognize that if economic entities are really as rational as we assume, they create serious problems for policy makers-an idea pointedly brought to our attention by the rational expectations school (Lucas and Sargent). An important challenge still before us, however, is to understand the emerging world economic system and to devise the institutions that can make it more orderly. The theme of this paper is that within the corpus of economics, we have the conceptual and quantitative tools to understand this complex new world and to design a more orderly, efficient, and equitable international economic system. Moreover given the importance of agriculture in the world economy, it is likely that food and agricultural issues will dominate the international dialogue in the decades ahead. Because of our own proclivity to address applied problems, agricultural economists have important contributions to make in expanding that stock of knowledge. U.S. foreign policy has been in disarray for at least a decade. Part of this disarray is because our relative political and economic power has clearly declined. At home our domestic institutions either were not designed for today's world, or they are evolving in directions that make it difficult (if not impossible) for us to deal with the world that is emerging. Perhaps uniquely among the democratic countries of the world, our president does not speak for a political party capable of being rallied to provide legislative support for his foreign policy-a phenomenon which baffles other countries. Within the federal bureau-