Allocation and the earnings function

Joop Hartog*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

26 Citations (Scopus)


This paper stresses the view that earnings differentials should be interpreted in the light of allocation in the labor market. A model is developed that acknowledges the difference between individual levels of characteristics and the levels of such characteristics required in the job. It is applied to data sets for the Netherlands, with education as the most important variable. Neither the individual's education nor the requirements of the job alone are sufficient to determine earnings: they should be considered jointly. The earnings function containing allocation thus proves superior to the function derived from either human capital theory or from segmented labor market theory.
Original languageEnglish
Pages (from-to)97-110
Number of pages14
JournalEmpirical Economics
Issue number2
Publication statusPublished - Jun 1986
Externally publishedYes


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