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Labor in the New Economy$
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Katharine G. Abraham, James R. Spletzer, and Michael Harper Harper

Print publication date: 2010

Print ISBN-13: 9780226001432

Published to Chicago Scholarship Online: February 2013

DOI: 10.7208/chicago/9780226001463.001.0001

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PRINTED FROM CHICAGO SCHOLARSHIP ONLINE (www.chicago.universitypressscholarship.com). (c) Copyright University of Chicago Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in CHSO for personal use.date: 19 September 2021

Measuring Labor Composition

Measuring Labor Composition

A Comparison of Alternate Methodologies

(p.457) 12 Measuring Labor Composition
Labor in the New Economy

Cindy Zoghi

University of Chicago Press

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

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