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Urban versus Rural Return to Human Capital in Portugal, A Cook-Book Recipe for Applying Assignment Models

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Author Info
Coen N. Teulings () (SEO, University of Amsterdam)
José A.C. Vieira () (University of Amsterdam and University of the Azores)

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Abstract

The Portuguese economy has been characterised by modernisation since the post-war period. Lisbon and the Tagus Valley is a centre of this process. Hence, this region faces a high demand for highly skilled labour. This paper analyses rates of return on human capital in the region of Lisbon and in the rest of the country in the period 1982- 1992. An assignment model of heterogeneous workers to heterogeneous jobs is discussed. We also develop a cook-book recipe for its estimation. The main implication, a high return being associated with similar workers being assigned to more complex jobs, is born out by the data. Apparently new technology in Lisbon triggers the demand for human capital, not the other way around. The estimation procedure allows us to obtain a simple, free dimension, parameter that measures the heterogeneity in jobs and therefore the ease of substitution between worker types. This is called the complexity dispersion parameter. Calculations suggest that paying half the optimal wage level is about to double the cost per efficiency unit of labour.

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Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 98-095/3.

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Date of creation: 18 Sep 1998
Date of revision: 20 Sep 2002
Handle: RePEc:dgr:uvatin:19980095

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Teulings, Coen N, 1995. "The Wage Distribution in a Model of the Assignment of Skills to Jobs," Journal of Political Economy, University of Chicago Press, vol. 103(2), pages 280-315, April. [Downloadable!] (restricted)
  2. Murphy, Kevin M & Welch, Finis, 1990. "Empirical Age-Earnings Profiles," Journal of Labor Economics, University of Chicago Press, vol. 8(2), pages 202-29, April. [Downloadable!] (restricted)
  3. Sattinger, Michael, 1975. "Comparative Advantage and the Distributions of Earnings and Abilities," Econometrica, Econometric Society, vol. 43(3), pages 455-68, May. [Downloadable!] (restricted)
  4. Kahn, Shulamit & Lang, Kevin, 1988. "Efficient Estimation of Structural Hedonic Systems," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 29(1), pages 157-66, February. [Downloadable!] (restricted)
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. José António Cabral Vieira & João Pedro Almeida Couto & Maria Teresa Borges Tiago, 2005. "Inter-regional Wage Dispersion in Portugal," ERSA conference papers ersa05p160, European Regional Science Association. [Downloadable!]
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  2. C.N. Teulings & P.A. Gautier, 2002. "Search and the City," Tinbergen Institute Discussion Papers 02-061/3, Tinbergen Institute. [Downloadable!]
  3. Pieter A. Gautier & Coen N. Teulings, 2000. "The Right Man for the Job: Increasing Returns in Search?," Econometric Society World Congress 2000 Contributed Papers 0066, Econometric Society. [Downloadable!]
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  4. Coen N. Teulings, 1999. "Substitution and Complementarity under Comparative Advantage and the Accumulation of Human Capital," Tinbergen Institute Discussion Papers 99-049/3, Tinbergen Institute. [Downloadable!]
  5. Teulings Coen N. & Gautier Pieter A., 2001. "The Right Man for the Job," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
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  6. Jose Antonio Cabral Vieira & Joao Pedro Couto & Maria Teresa Tiago, 2006. "Regional Differences in Returns to Education in Portugal," ERSA conference papers ersa06p44, European Regional Science Association. [Downloadable!]
  7. Gautier, Pieter A & Teulings, Coen N, 2003. "How Large are Search Frictions?," CEPR Discussion Papers 3861, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  8. Vieira, J.A.C. & Madruga, P., 2004. "Regions and Low-Wage Mobility in Portugal, 1996-2000," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 4(2). [Downloadable!]
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