Labour with different types of skills and jobs as production factors
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A Cobb-Douglas production function with labour of three different levels of education is proposed. The quantity of labour with primary education is defined as the number of people having jobs requiring primary education plus the number of people with primary education who actually have jobs requiring secondary education, the latter being given a weight above one. An analogous definition applies to the quantity of labour with secondary education, where some people will actually have jobs requiring either second or third-level schooling. A simple model where utility functions developed elsewhere are also involved is used to determine the income distribution over levels of education and jobs for given numbers of labourers with primary and secondary education. Doubling the number of those with second and thirdlevel schooling will reduce income differences to about one half.
KeywordsSimple Model Utility Function Production Function International Economic Public Finance
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