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Human capital and market size

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  • Cecilia Vives

Abstract

This paper studies how the size of the labour market affects workers' decisions to invest in human capital. We consider a model of mismatch where firms rank workers according to their level of skills. The matching process operating in the market has the property that the job finding probability of workers depends on market size, market tightness and their ranking. The model is consistent with several facts highlighted in empirical studies: in bigger markets the distribution of human capital is more unequal and the returns to skill are higher. Este artículo estudia cómo afecta el tamaño del mercado laboral a las decisiones de los trabajadores de invertir en capital humano. Se considera un modelo de desajuste en el que las empresas clasifican a los trabajadores en función del nivel de sus cualificaciones. El proceso de emparejamiento que opera en el mercado tiene la propiedad de que la probabilidad de que los trabajadores encuentren trabajo depende del tamaño del mercado, de la estrechez del mercado y de su clasificación. El modelo es coherente con varios hechos destacados en estudios empíricos: en los mercados más grandes, la distribución del capital humano es más desigual y el rendimiento en función de las cualificaciones es mayor. 本稿では、労働市場の規模が、人的資本に投資に対する労働者の意思決定にどのように影響するかを検討する。企業が従業員をスキルレベルで序列をつけた場合に起こるミスマッチのモデルを検討する。市場におけるマッチングのプロセスには、労働者が仕事を得る確率は、市場の規模、市場の逼迫性、労働者の序列に依存するという特性がある。このモデルは、規模の大きい市場ほど人的資本の分配は不均衡であり、スキルに対する報酬が高くなる、という実証研究が明確に示した事実と一致している。

Suggested Citation

  • Cecilia Vives, 2019. "Human capital and market size," Papers in Regional Science, Wiley Blackwell, vol. 98(1), pages 75-92, February.
  • Handle: RePEc:bla:presci:v:98:y:2019:i:1:p:75-92
    DOI: 10.1111/pirs.12336
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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