IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Labor Quality, the Demand for Skill, and Market Selection

  • Sherwin Rosen

This paper investigates some alternative definitions of labor for productivity and demand analysis. The paper is organized as follows: Section II considers the organization of work activities in a simple fixed coefficient technology in the presence of comparative advantage among various classes of workers. Assuming that the number of independent productive activities exceeds the number of comparative advantage classes, an application of the envelope theorem shows the derivation from first principles of a neoclassical production function with input dimension (the number of workers of each type) smaller than the engineering technology(the number of activities). This is the basic result illustrating that occupational classifications depend on both the technology and the distribution of skills (factor supplies) in the working population, a fact that may be relevant to international and other cross-sectional differences in productivity and the demand for labor. The situation is reversed in section III, which treats the case where the number of worker classifications exceeds the number of production activities. In this case the micro-technology cannot be reduced below the basic set of work activities one starts with, and within these categories labor can be aggregated according to efficiency units. However, the nature of factor endowments in economies of this sort is rather different than in the neoclassical model, and leads to an output transformation function that has all the neoclassical properties. This result is reminiscent of an example of Houthakker (also, see Sato) who also obtained smooth neoclassical behavioral functions from underlying distributional phenomena. Section IV examines the characteristics-factor approach to labor aggregation and relates it to the results in section III, noting an inherent difficulty arising from selectivity of various ability groups of workers among work activities due to comparative advantage. In effect, the existence of rent destroys the possibility of simple linear aggregation. Finally, section V indicates some problems with applying the theory of marriage directly to labor demand. These issues become most interesting when there are incomplete markets that limit the gains from fully exploiting comparative advantage, due to transactions costs. The results are limited, but some examples show that any predictions concerning positive or negative assortive matching of workers depends not only on the correlation of talents among members of the work force, but also on the nature of technology and the distribution of demands for various outputs.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.nber.org/papers/w0162.pdf
Download Restriction: no

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 0162.

as
in new window

Length:
Date of creation: Jan 1977
Date of revision:
Publication status: published as Rosen, Sherwin. "Specialization and Human Capital." Journal of Labor Economics, Vol. 1, No. 1, (January 1983), pp. 43-49.
Handle: RePEc:nbr:nberwo:0162
Contact details of provider: Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Phone: 617-868-3900
Web page: http://www.nber.org
Email:


More information through EDIRC

References listed on IDEAS
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.:

as in new window
  1. Sattinger, Michael, 1975. "Comparative Advantage and the Distributions of Earnings and Abilities," Econometrica, Econometric Society, vol. 43(3), pages 455-68, May.
  2. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
  3. Stiglitz, Joseph E, 1975. "The Theory of "Screening," Education, and the Distribution of Income," American Economic Review, American Economic Association, vol. 65(3), pages 283-300, June.
  4. Alchian, Armen A & Demsetz, Harold, 1972. "Production , Information Costs, and Economic Organization," American Economic Review, American Economic Association, vol. 62(5), pages 777-95, December.
  5. Tjalling C. Koopmans & Martin J. Beckmann, 1955. "Assignment Problems and the Location of Economic Activities," Cowles Foundation Discussion Papers 4, Cowles Foundation for Research in Economics, Yale University.
  6. Lewis, H Gregg, 1974. "Comments on Selectivity Biases in Wage Comparisons," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1145-55, Nov.-Dec..
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:0162. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.