- An ordered response model for allocation and earnings
- Volume | Issue number
- 41 | 1
- Pages (from-to)
- Document type
- Faculty of Economics and Business (FEB)
- Amsterdam School of Economics Research Institute (ASE-RI)
An ordered-response model for the allocation of individuals to jobs differing in degree of difficulty and complexity is estimated. Earnings differentials are estimated with an earnings fun ction exhibiting interaction between job level and individual charact eristics. The index of comparative advantage derived from it is added to the ordered-response model and clearly suggests that allocation i n the labor market follows comparative advantage. Allocation appears sensitive to the state of the local labor market. The model is also u sed to estimate the effect of elimination of less desirable variables (family background, gender, state of the labor market).
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