Trade unions. Models of bargaining and strikes.

Human capital theory. Model of individual investments in human capital. Public policy measures supporting the demand for education.

Trade unions. Models of bargaining and strikes.

1) Human capital Is the set of skills and knowledge of the worker that can be “rented out” to the employer.

Investments in Human Capital include investments in:

· Education and training

· Migration

· Job Search

 

Human Capital Investments: basic model

Costs:

1) Out of pocket or direct expenses include tuition costs and expenditures on books and other supplies

2) Foregone earnings because during the investment period it is usually impossible to work, at least not full-time

3) Psychic losses, because learning is often difficult and tedious

 

Returns of Investments in Human Capital

1. Higher future earnings

2. Increased job satisfaction over one’s lifetime

3. A greater appreciation of nonmarket activities and interests

 

Income-age Profiles

Characteristics of the profiles

1. Average earnings of full-time workers rise with the level of education;

2. The most rapid increase in earnings occurs early in one’s working life, thus giving a concave shape to the age/earnings profiles of both men and women;

3) Age/earnings profiles tend to fan out, so that education-related earnings differences later in workers’ lives are greater than those early on;

4) The age/earnings profiles of men tend to be more concave and to fan out more than those for women

Public policy measures supporting the demand for education

· proffecional forecasts of the labor market

· full information about the market

· lower time for education, multistep education

· government policies