Human Capital Accumulation of Salaried and Self-Employed Workers.

Abstract

Both human capital accumulation and Lazear contracts can explain the rais- ing wage of salary/wage worker through job experience or tenure. To distin- guish between these two effects, Lazear and Moore (1984) used self-employed workers' wage growth to partial out the effect of human capital accumulation from salary/wage workers' wage growth. When the human capital accumu- lation behavior is identical across two kinds of jobs, the difference in wage growth between salary/wage workers and self-employed workers are due to Lazear contract since self-employed workers' wage are determined by their productivity. However, in the model developed in this paper, when self- employed workers face more wage variation but enjoy a higher return for human capital, human capital accumulation for those two kinds of jobs are shown to be different.HUMAN CAPITAL ; WAGES ; SELF-EMPLOYED