Chapter 3 ECON 365 Flashcards
What is formal education, on-the-job training, health care
Human Capital
What is people and skills, not plant and equipment?
Human Capital
What has come characteristics that make it different from financial capital.
Human Capital
What is not liquid. If an investment doesn’t work out there is not much to sell.
Human Capital
What may adheres to the individual so there is a problem for the firm if the individual leaves.
What may be benefits to society for training.
What may be consumption returns in its acquisition as well.
Human Capital
What is the extent to which unobserved ability differences exist affects estimates on returns to schooling, since the ability difference may be the true source of the wage differential.
Ability biases
What is an investment in human capital that rises productivity of worker at current and other firms.
What is learn economics. General: useful at hundreds of universities and in business.
General on-the-job training
What makes a worker more productive at the current firm, but has no effect on productivity elsewhere.
Learn library system used only by UNR:Specific
Firm-specific on-the-job training
What is it when a worker cannot go somewhere else to get the returns to training.
Firm-Specific Training.
What if the worker pays for the investment: The firm dose not need to increase wages if the training is specific because the worker has no better job alternatives.
Firm-Specific Training
What type of training is it if the firm pays for the investment: The worker can threaten the firm with quitting because the firm will lose its investment in training.
Firm-Specific Training.
What type of training is it when it is likely that the firm and worker will agree to share the training cost as well as the benefits. This can be don with an upward sloping wage profit.
Firm-Specific Training
Workers learn overtime both through formal education and on the job training
New Consideration
What is the following:
Every firm is different in its business, organization, and corporate culture, employees with similar abilities will not fit equally will at the same employer
Matching
How is human capital can be acquired in what two ways?
Education and on the job training
What is the following?
- investments are made if the present value of the cash flow
- other benefits generated by the investment exceeds the present value of the costs of the investment
capital theory
The following is benefits beyond increasing earnings
- Joy
- increases your enjoyment of travel or literature
- most important benefit in the labor market
Education
What is the two cost of investments in education
- first is the direct cost of tuition
2. cost is the opportunity cost of the time spent on education
What is the following for any investment is that it should be made as long as the present value of the return on the investment exceeds the present value of the cost of the investment
Decision Rule
What is a complementary with a technologically advantage society
education
The following are two elements of what?
- is assigning some tasks to suppliers outside of the firm
- is the use of lower wage workers overseas
outsourcing
Capital tends to be complementary in what?
Production with a skilled workforce.
What is skills or knowledge that a worker can acquire that rises productivity equally at both the current employer, and many other employers.
General human capital
What is the raise of productivity at your current employer, but dose not raise your value to other firms at all.
Firm-specific human capital
What is a firm-specific investments, particularly intellectual property, sometimes causes firm and is in the employment contract
Non compete agreement
What is the benefit from training investment?
- education is general human capital
2. on-the-job training can be either general or firm specific human capital.
What will lower the expected returns on the investment, possibly to the point where neither is willing to make the investment.
Renegotiation Risk
The following is two way to solve what problem?
- rely on the trustworthiness of one or both parties.
- split the cost and the return on the investment
Renegotiation risk.
Education obtained from a university is almost purely what kind of capital
General human capital
What is when both have some incentive to invest in and maintain the relationships
internal labor market
When will more workers tend to invest in a mix of skills that is a strong fit for the current job and employer.
When turnover in a firm is low
When will more workers tend to invest in skills that can be easily applied at other firms.
What turnover in a firm is high
The follow are what?
- pay will tend to rise with one’s labor market experience.
- beyond this effect of total experience on earning, higher tenure in a firm will tend to have higher pay than those who don’t
- The more firm-specific the employee skills, the more pay they tend to lose if they switch
Compensation patterns
What type of market is one in which the worker finds it relatively easy to get a new job that values there skills.
Thick market
What is affected by the size of the local economy and depends on the employee’s skill mix
Thickness
Employees in what type of firm tend to invest more heavily in a mix of skills that is specific to their employer.
Large firms
What is it when cash and other benefits paid to employee.
Compensation
What is the second condition in which a worker and firm generate extra profits if they stay together
Firm-specific human capital
What is it if a worker is, for any reason a particularly good fit for one employer than there is some benefit to the employee staying at the firm.
Matching
What time that two parties can make an investment that crates profits only if the parties continue to work together
Relationship-specific investment
The following is a direct solution to what?
- the two firms can merge
- alternative is to write a formal contract specific with the firm and employee pay or reduce under all circumstances.
joint venture
What is an important way to reduce holdups problems
implicit contracting
What is a distinctly different from formal contracting or regulation
implicit contracting
