scholarly journals Manager's effort and endogenous economic discrimination

2004 ◽  
Vol 34 (3) ◽  
pp. 431-440 ◽  
Author(s):  
Jaime Orrillo ◽  
Paulo R. A. Loureiro
Keyword(s):  
Human Capital ◽  
Labor Supply ◽  
Labor Markets ◽  
Wage Differential ◽  
Pricing Decision ◽  
Additional Input ◽  
Supply Functions ◽  
Output Market ◽  
Input Markets

Assume a labor supply consisting of two types of workers, 1 and 2. Both workers are equally productive and exhibit supply functions with the same elasticity. We consider a firm (entrepreneur or shareholders) that is competitive in the output market and monopsonistic in input markets. The firm uses the services of a manager who has a high human capital and whose wage is given by the market. It is supposed that the manager does not like to work with one type of worker, say type 1. If we allow the manager's effort to be an additional input without any extra (in addition to his salary) cost for the firm, then the firm's pricing decision will be different for both workers. That is, there will be a wage differential and therefore endogenous economic discrimination2 in the labor markets.

Micro and Macro Labor Supply Elasticities: A Reassessment of Conventional Wisdom

2012 ◽  
Vol 50 (2) ◽  
pp. 464-476 ◽  
Author(s):  
Michael Keane ◽  
Richard Rogerson
Keyword(s):  
Human Capital ◽  
Life Cycle ◽  
Optimal Design ◽  
Labor Supply ◽  
Capital Accumulation ◽  
Conventional Wisdom ◽  
Human Capital Accumulation ◽  
Micro Data ◽  
Large Aggregate ◽  
Economic Issues

The response of aggregate labor supply to various changes in the economic environment is central to many economic issues, especially the optimal design of tax policies. Conventional wisdom based on studies in the 1980s and 1990s has long held that the analysis of micro data leads one to conclude that aggregate labor supply elasticities are quite small. In this paper we argue that this conventional wisdom does not hold up to empirically reasonable and relevant extensions of simple life cycle models that served as the basis for these conclusions. In particular, we show that several pieces of conventional wisdom fail in the presence of human capital accumulation or labor supply decisions that allow for adjustment along both the extensive and intensive margin. We conclude that previous estimates of small labor supply elasticities based on micro data are fully consistent with large aggregate labor supply elasticities. (JEL D91, E24, J22)

Rethinking Labor Demand

2020 ◽  
pp. 174-194
Author(s):  
Phillip Brown
Keyword(s):  
Human Capital ◽  
Labor Markets ◽  
Capital Investment ◽  
Labor Demand ◽  
Occupational Structure ◽  
Life Chances ◽  
Orthodox Theory ◽  
Investments In Education ◽  
And Training

This chapter turns to questions of labor demand at the heart of the new human capital. It rejects Gary Becker’s claim that orthodox theory offered an entirely new way of looking at labor markets, where the main focus is on labor scarcity and a skills competition, in which individuals, firms, and nations compete on differential investments in education and training. It also rejects David Autor’s claim that the issue is not that middle-class workers are doomed by automation and technology, but instead that human capital investment must be at the heart of any long-term strategy for producing skills that are complemented by rather than substituted for by technological change. The chapter argues that the new human capital rejects the view that demand issues can be resolved through a combination of technological and educational solutions. Rather a jobs lens is required to shed new light on changes in the occupational structure, transforming the way people capitalize on their education, along with the distribution of individual life chances.

Too Good to Hire? Capability and Inferences about Commitment in Labor Markets

2019 ◽  
Vol 65 (2) ◽  
pp. 275-313 ◽  
Author(s):  
Roman V. Galperin ◽  
Oliver Hahl ◽  
Adina D. Sterling ◽  
Jerry Guo
Keyword(s):  
Human Capital ◽  
Labor Markets ◽  
Experimental Studies ◽  
Candidate Selection ◽  
Hiring Managers ◽  
Hiring Process ◽  
Upper Limit ◽  
Selection Decisions ◽  
Level Of Effort

We examine how signals of a candidate’s capability affect perceptions of that person’s commitment to an employer. In four experimental studies that use hiring managers as subjects, we test and show that managers perceive highly capable candidates to have lower commitment to the organization than less capable but adequate candidates and, as a result, penalize high-capability candidates in the hiring process. Our results show that managers have concerns about a high-capability candidate’s future commitment to the organization because they view highly capable candidates as having lower levels of organizational interest—meaning they care less about the mission and values of the organization and exert a lower level of effort toward those ends—and because they assume highly capable candidates have more outside job options, increasing their flight risk. Our findings highlight that capability signals do not necessarily afford candidates an advantage in selection, suggesting an upper limit on credentials and other signals of capability in helping candidates get jobs. Our study contributes to research on labor markets, human capital, and credentialing by offering a theory for why and when capability signals can negatively influence job candidate selection decisions.

Health, Human Capital, and Life Cycle Labor Supply

2014 ◽  
Vol 104 (5) ◽  
pp. 127-131 ◽  
Author(s):  
Charles Hokayem ◽  
James P. Ziliak
Keyword(s):  
Human Capital ◽  
Life Cycle ◽  
Labor Supply ◽  
Strong Evidence ◽  
Capital Stock ◽  
Good Health ◽  
Learning By Doing ◽  
Health Capital ◽  
Supply Model

We use new PSID data on consumption and health, along with information on annual sick time, to estimate a structural labor supply model that incorporates a health capital stock with the traditional human capital learning-by-doing model. The estimates show strong evidence of learning by doing as well as strong persistence in health. However, the estimates reveal that time and money seem to have little effect on health consistent with 'flat of the curve' medicine. We find strong evidence that consumption and leisure are direct substitutes in preferences, and consumption and leisure are each utility complements with good health.

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