The Assignment of Workers to Tasks, Wage Distribution and Technical Change: A Critical Review

This paper reviews the literature on two-sided atomeless assignment models of workers to tasks. Using simple parametric examples, the fundamental differences between the comparative advantage and the scale of operations models are illustrated. Holding the distributions of abilities and tasks and the production function of worker-task pairs constant, the two principles are shown to produce different wage distributions and wage inequality. These models are useful to evaluate the general equilibrium effect of technical change on the wage structure. In all models, skilled-biased technical change that impacts the production function of worker-task pairs lead to rising wage inequality.technical change, wage structure, assignment models

A Microfoundation for Production Functions: Assignment of Heterogenous Workers to Heterogenous Jobs

In very different fields of economics, economic inference and policy evaluation require economists to parametrize a production function that links measures of input factors to measures of output. While doing so, strong assumptions are implicitly made about microeconomic variables governing the shape of the aggregate production function. In this paper, I develop an assignment model that provides a microeconomic foundation for aggregate production functions. The shape of the production function depends crucially on the distribution of workers and jobs and the type of technological changes depends crucially on the evolution of these distributions. Sufficient and necessary conditions are provided for the production function to be of the Constant Ratio of Elasticities of Substitution form, a form nesting the broadly used Constant Elasticity of Substitution form. This model provides a way to evaluate how stringent assumptions about the type of production function or technological change are by comparing the implied distribution of jobs and its evolution over time to observations of the distribution of jobs and its evolution over time.microfoundations of production function, tasks assignment, technical change

Supply and Demand, Allocation and Wage Inequality: An International Comparison

In this paper, we develop an allocation model of workers differentiated by their field of study to test whether international differences in the wage structure can be explained by differences in labor demand and supply in each country. The model explicitly takes into account the effects of supply an demand shifts on the allocation structure to disentangle country specific differences in the recruitment for one occupation from real supply-demand effects. Empirical results based on data for nine countries show that cross-country differences in wage inequality explain at least 2/3 of the differences in labor demand and supply.education, training and the labour market;

Hierarchical Organization and Inequality in an Economy with an Implicit Market for Productive Time

This paper proposes an equilibrium theory of the organization of work in an economy with an implicit market for productive time. In this economy, agents have limited productive time and can choose to produce in autarky, buy productive time from helpers to increase own production or, sell their productive time to a leader and thereby give up own production. This implicit market gives rise to the formation of teams, organized in hierarchies with one leader at the top and helpers below. We show that relative to autarky, hierarchical organization leads to higher within and between team payoffs/productivity inequality. We investigate this link empirically in the context of road cycling. We show that the rise in performance inequality in the peloton since the 1970s is merely due to a rise in within team performance inequality and consistent with a change in the hierarchical organization of teams and an increase in the helping intensity within team.hierarchical organization, productive time, helping time, inequality, professional cycling

Shifts and Twists in the Relative Productivity of Skilled Labor

Skill-biased technical change is usually interpreted in terms of the efficiency parameters of skilled and unskilled labor. This implies that the relative productivity of skilled workers changes proportionally in all tasks. In contrast, we argue that technical changes also affect the curvature of the distribution of relative productivity. Building on Rosen''s (1978) tasks assignment model, this implies that not only the efficiency parameters of skilled and unskilled workers change, but also the elasticity of substitution between skill-types of labor. Using data for the United States between 1963 and 2002, we find significant empirical support for a decrease in the elasticity of substitution at the end of the 70s followed by an increase at the beginning of the 90s. This pattern of the elasticity of substitution has contributed to the labor productivity slowdown in the mid 70s through the 80s and to a speedup in the 90s.education, training and the labour market;

How Large Is the Compensating Wage Differential for R&D Workers?

The aim of this paper is to measure the extent to which lower wages in R&D functions reflect a preference effect. In contrast to the bulk of the literature on compensating wage differentials that compares wage levels of jobs with different attributes, we constructed measures of willingness to accept (WTA) and pay (WTP) for an R&D jobs using contingent valuation technique. Earnings regressions using OLS show an R&D wage penalty of about 3.5%. However, hedonic OLS regressions of WTA and WTP give significant relative preference parameters for R&D jobs that range from 0.19 to 0.22.R&D workers, compensating wage differentials, hedonic prices