M Mobinul Huq

Date of Award


Degree Type


Degree Name

Doctor of Philosophy


In recent years a greater emphasis has been given to the matching/sorting models of human capital investment. In these models, education generates better person-specific information which leads to a return from improved firm-worker matching. The first purpose of this thesis is to explain the factors that determine the real return for education through better firm-worker matching. The second purpose is to examine how this return is affected by two changes in the economy: firstly changes in the age composition of the labour force as a baby boom generation passes through the labour force, and secondly the introduction of a social pension plan.;The thesis shows that the real return from better firm-worker matching is determined by the structure of final output demand. The greater the demand for output produced by the 'older worker intensive' industry, the larger will be the gain from specialization through investment in person-specific information. It is also shown that the individually chosen investment in information will be in general smaller than the 'golden rule' steady state level. For the economy as a whole a higher level of productivity gains from schooling will lead to a lower allocative gain.;Any change in the age structure of the labour force leads to a change in the real gains from better firm-worker matching and the level of investment in information. When the number of younger workers increases, through changes in the demand conditions the allocative gains from education increase, and the level of investment in information is also increased. An increase in the number of older workers has the opposite effects.;In the presence of a social pension plan if the growth rate of the pension contribution and the rate of interest are not equal, the return from, as well as level of, investment in information will be affected. In the case of proportional or regressive tax rates, if the pension fund grows at a faster (slower) rate, the existence of such a plan will increase (decrease) the return from information but decrease (increase) the actual level of investment in information.



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