| Age-Earning Profile | A graph showing the earnings level of a specific worker or group of workers at various ages over the life cycle.
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| Efficiency Units | A standardized measure of human capital.
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| General Training | The type of on-the-job training that, once acquired, is equally useful in all firms.
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| Human Capital | The accumulation of prior investments in education, on-the-job training, health, and other factors which increase productivity.
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| Mincer Earnings Function | Jacob Mincer's human capital earnings function which shows that the human capital model generates an age-earnings profile of the form: log w = bs + d1t + d2t2 + other variables, where w is the worker's wage rate; s is the number of years of schooling; t gives the number of years of labor market experience, and t2 is a quadratic on experience that captures the concavity of the age-earnings profile.
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| Opportunity Cost | the amount of other products that must be forgone or sacrificed when making a choice.
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| Present Value | The amount necessary to invest today in order to have a given dollar amount at a future date. Means of converting future receipts or expenditures to today=s dollars.
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| Private Rate of Return | The percentage increase in a workers's earnings resulting from an additional year of schooling.
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| Rate of Discount | The interest rate used to calculate the prevent value of a stream of benefits or costs.
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| Rate of Return to Schooling | The percentage change in earnings resulting from an additional year of schooling.
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| Selection Bias | The fact that workers self-select into jobs for which they are best suited. In other words, the matching process between workers and jobs is systematic and not random. This implies that it may be misleading to predict the wage of worker if they were to change jobs based on workers who have selected this job, because these job changers are likely to not be as well-suited to the job as those who actually selected the job.
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| Signaling | An argument developed by Michael Spence that education in the labor market indicates ("signals") to employers that the worker who holds a certificate or diploma is relatively productive. If education is a "pure signal", it is correlated with but not the cause of higher productivity.
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| Social Rate of Return | The percentage increase in national income resulting from an additional year of schooling.
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| Specific Training | The type of training that enhances productivity only in the firm where it is acquired, and the productive value of the training is lost once the worker leaves the firm.
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| Temporary Layoffs | The fact that many specifically-trained workers do not search for employment after being laid off. This occurs because specific training only raises productivity at the firm in which the training was received. Thus, a worker has an incentive to await out the unemployment spell rather than search for new employment.
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| Wage-Schooling Locus | A graph showing the salary that a worker earns if he completes a particular level of schooling.
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