Chapter

Measuring Labor Composition

Cindy Zoghi

in Labor in the New Economy

Published by University of Chicago Press

Published in print November 2010 | ISBN: 9780226001432
Published online February 2013 | e-ISBN: 9780226001463 | DOI: http://dx.doi.org/10.7208/chicago/9780226001463.003.0013
Measuring Labor Composition

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This chapter gives a comparison of the methodologies to measure labor composition. Productivity estimates require a measure of labor input, which is a combination of workers, number of hours they work, and effectiveness of those hours. A measure that only counts number of workers or hours ignores that some work hours produce more than others. A labor composition index adjusts the total hours worked for the demographic composition of those hours, which requires identification of separate, heterogeneous groups of labor input, whose work hours are likely to have varying effectiveness. One methodological choice is whether to measure the weights for each worker group using actual median wages within the group, or using imputed wages, where the imputation is derived from Mincer wage equations. The second methodological choice is which set of variables to use to identify distinct worker groups, each of which has a different expected marginal productivity.

Keywords: labor composition; methodology; productivity; wages; labor

Chapter.  12387 words.  Illustrated.

Subjects: Microeconomics

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