Human capital theory 清华大学王一江Word文档格式.docx

Human capital theory 清华大学王一江Word文档格式.docx

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pay-ageofworker

ments

B

ii.Determiningtheoptimallevelofinvestment

∙Presentvalue=B1/（1+r）+B2/（1+r）2+…+BT/（1+r）T

∙Thispresentvalueiscomparedwiththecurrentmarginalcosttodetermineifanadditionalunitofexpenditureisworthwhile.

∙Internalrateofreturnmethod.Usethesameformulaasabove.Askthequestion“howlargecouldthediscountratebeandstillrendertheinvestmentprofitable?

”

∙Exampleofvaluinghumanassets:

E&

S,p.315.

iii.Implicationsofthetheory

∙ThosewhodislikeschoolswillinvestlessinHC.

∙Thosewhohavefeweropportunitieswillinvestless.

MC’

MC

MB

∙Youngerpeoplearemorelikelytoattendcollege.

∙Present-orientedpeoplearelesslikelytogotocollegethanforward-lookingpeople（e.g.,therearepeopleforthemcurrentincomeismoreimportant）.

∙Collegeattendancewilldecreaseifthecostsofcollegerise.

∙CollegeattendancewilldecreaseifincomedifferencebetweencollegeandHSgraduatesnarrows.

∙Thosewhobeartheprimaryresponsibilitiesforchildbearingandraising（historicallywomen）arelesslikelytoseekasmucheducation.

∙But,asthenumberofchildrendecreases,womenwillseekmoreeducation.

Generalvs.Firm-SpecificHumanCapital

1.Introduction.

i.DefinitionsGvs.SHC

●Conceptualdefinitions（generalHC,firmSHC,andIndustrySHC.）

●Aretheypracticallyseparable?

ii.Implications

●Firmsarenotwillingtoinvestinworkers’GHC.

●LaborturnoverisadverselyaffectedbyinvestmentinSHC.Mincer&

Jovanovic（1981）reportdatathattheannualseparationratedropsby90%fromthefirstyeartothe6thyearwiththefirm.

●GHChasnoeffectonlaborturnover.

2.SHCinvestmentandmatching/turnover（Parsons.1986,inthespiritofMortensen1978;

HashimotoandYu,1979;

andHarshimoto,1981.）

i.Assumptions

●Theworkerandthefirmmustundertakeaninvestment（inSHC,or“organizationalcapital”）iftheworkeristobeanefficientemployee.Investmentcostisc.

●Aftertheinvestment,theworker’sproductivityinthefirmandthatinthelabormarketaresubjecttorandomshocks.Theformermaybeduetoareversalofdemandforthefirm’sproduct.Thelattermaybeduetosomestructureintheeconomy.（Comment:

twoshocksarenotnecessary.Itistherelativevaluesoftheworker’sproductivityinandoutsideofthefirmthatmatters.）

●Theworker’srealizedproductivityisthus

Vi=μi+θi,i=0,1（w/investment）

Vi=0,（w/oinvestment）

μ0:

worker’sexpectedproductivityatthefirm.

μ1:

worker’sexpectedproductivityatanotheremployment

θ0:

Arandomvariable,shocktoproductivityattheemployment

θ1:

Arandomvariable,shocktoproductivityatotheremployment

E（θ）=0

●Thefirmmaximizesprofitandtheworkerincome.

ii.Results.

●μ0–μ1hastobegreaterthanthecosttomakeinvestmentintheworkerprofitableonaverage,μ0–μ1>

c.

●EfficientseparationoccurswhenV0<

V1μ0+θ0<

μ1+θ1,orm=μo-μ1<

θ1-θ0

θ1

m

θ0

（-m,0）（0,0）

●Separationislessifθ1&

θ0arepositivelycorrelated.Thereisnoseparationiftheyareperfectlyandpositivelycorrelated.

●Ifθ1&

θ0areindependent,increasedvarianceineitherofthemwillincreasetheprobabilityofseparation.

●Sinceseparationisefficient,distinctionbetweenlayoffs&

quitsisnotnecessaryandmeaningful.

iii.Informationrequirementinsharingthegain

●Definingfactorpayments

w=V1+α（V0–V1）

=V1+αm+α（θ0–θ1）

andπ=V0–w

=（1-α）（V0–V1）

=（1–α）m+（1–α）（θ0–θ1）

where0<

α<

1isapredeterminedsharingrule.

●Ifinvestmentcostμ0–μ1=m>

c,butαm<

c,and（1–α）m<

c,thenneithertheworkernorthefirmwouldmaketheinvestment.Thetwosideswillhavetosharethecostofinvestment.

●Underthissharingrule,separationisefficient,i.e.,itoccurswhentheworker’soutsideproductivityisgreaterthanatthecurrentfirm.

●However,toimplementthesharingrule（asmightbesignedinacontract）,anunrelated3rdpartymustbeabletoobservetherandomelementsθ0andθ1,aswellasthepermanentfactorsμ0&

μ1（theirdifferencem）.Withoutrelevantinformation,suchacontractisnotfeasible.

iv.Comments

●Parsonsoverstatedtheinformationalrequirement.If,forexample,thetwoinvolvedpartiesknowμ0&

μ1atthebeginning,andlearnaboutθ0andθ1aftertheinvestment,theycanbargainingtodeterminethesharesofthenetgainwithoutinterventionbya3rdparty.Whenthe2partieslearnaboutθ0andθ1iscritical.

●Bargainingdoesn’tworkonlyifthereistwo-sidedasymmetricinformation,e.g.,thefirmknowsθ0buttheworkerdoesn’t.Theworkerknowsθ1butthefirmdoesn’t.

●Afixed-wageandup-or-outcontractisneededtoprovideincentiveswhentheinformationalasymmetryis2-sidedandsoismoralhazard.

Up-Or-OutContractasanIncentivetoEncourageSHCInvestment

1.Thequestion.

i.Inmanyorganizations,ifpromotiondoesn’toccurwithinsomesettime,individualsarenotretainedevenwhenitappearsproductivetodoso.Examplesincludetenure,partnership,andpromotionruleinthemilitary.

ii.Itisnotclearwhylessproductivejuniorworkersaretoldtoleaveratherthanbeingofferedthejobatreducedwages.

iii.Two-sideduncertaintycanexplainthispuzzle.Withtwo-sideduncertainty,bothfirmandworkeraresubjecttoamoralhazardproblem,inwhichworkerhasatendencytounderinvestinhishumancapitalwhilefirmthetendencytounderreportworker’sproductivity.Themodel

2.ThemodelofKahnandHuberman（1988,JOLE）.

i.Assumptions.

●Aworker’soutputatthefirmiseitherb2orb1,b2>

b1.

●Theopportunitycostoftheworker’slaborisr<

b1,meaningthatevenwithabaddraw,theworkerpreferstostayifhecanbepaidawageconsistentwithb1.

●Theworkerhastoreceiveatleastutilitylevelv.

●Thefirmproducesnothingiftheworkerisletgo.

●Theworkercanmakeaninvestmenttoincreasetheprobabilityofb2fromf（0）tof

（1）.f（0）<

f

（1）.Theinvestmentisfirmspecific.

●Investmenthascostianditisefficientfortheinvestmenttobeundertaken,i.e.,theinvestmenthasthenetsocialgainZwith

Z≡[f

（1）–f（0）]（b2–b1）–i>

0

（1）

●Productivityislearnedbeforetheworkisactuallydone,sothatinprinciplethedecisiontoworkornotcanbemadecontingentonthedraw.

●Bothfirmandworkerarerisk-neutral.

ii.Thecaseofperfectinformation

Underperfectinformation,thetwosideswillsignanefficientcontractwiththefollowingcontents.

●Theworkerwillundertaketheinvestment.

●Hewillworkforthefirmnomatterwhatthedrawofproductivitymaybe.

●Heiscompensatedy=v+i（=r+i?

）

iii.Whenthefirmhasprivateinformationregardingtheworker’sproductivity.

●Normally,thiswillresultinsomedistortion.

●However,inthisparticularcase,itdoesn’talterthefullinformationcontractbecausetheworker’soutsideproductivityisneverashigh.Aslongasicanbecontractedandtheinvestmentismade,thesamefixedwageshouldbeofferedandtheworkeralwaysretained.

iv.Wheninvestmentisprivateinformation

●Thisisastraightforwardmoralhazardproblem.

●Thecontracttiescompensationtooutput.Buttheworkerisstillalwaysretained.

●Lety2andy1representthepayofferedinthetworealizations,withy2>

y1.Theincentivecompatibilityconditionforundertakingtheinvestmentis

f

（1）y2+[1–f

（1）]y1–i

（2）

>

f（0）y2+[1–f（0）]y1.（IC）

●Fortheworkertoacceptthecontract,itisnecessarythat

f

（1）y2+[1–f

（1）]y1–i>

v.（IR）（3）

●Together,y2andy1arefoundwhenthetwoconditionsaretreatedasequalitieswilldeterminelevelsofy2andy1thatwillmaximizethefirm’sprofits.Notethat

y2>

v+i>

v>

y1（4）

●Itremainstobedeterminedthatthecontractentailsahigherprofitthanifitdoesn’tinducetheworkertoinvest.Thisrequiresthat

f

（1）（b2-y2）+[1–f

（1）]（b1-y1）–i

f（0）b2+[1–f（0）]b1-v.（5）

●（5）canbereducedto

（1）.Thismeansthat,providedtheinvestmentissociallyproductiveandagentsareriskneutral,moralhazardproblemalonecreatesnoinefficiency.Thereasonforthisisthat,aslongastheinvestmentismade,gainorlossbyeitherpartyisonlyatransferbetweenthetwoparties,notanetsocialloss.

●

（2）guaranteesthattheinvestmentwillbemade.

v.Two-sidedinformationalproblemandup-or-outcontract.

Theproblem:

●Theworkerhasprivateinformationregardinginvestment.

●Thefirmhasprivateinformationregardingtheproductivitydraw,i.e.,whetherit’sb1orb2.

●Becauseiisprivateinformation,theworkerwillnotinvestifheispaidafixedwage&

guaranteedemployment（asunder