Raw Labor: Homogeneous or Heterogeneous?

According to the human capital theory, each worker´s earnings consist of two additive components: raw labor and human capital. Raw labor refers to the initial earnings capacity of each individual before the acquisition of any human capital. Human capital is the result of education and labor experience.

The results of this paper, obtained using the Wage Indicator data for Argentina, Brazil and U.K., favor the hypothesis of homogeneous innate abilities. If so, it means that, on a basis of an essentially homogeneous raw labor, heterogeneities are mainly built through the education process and the accumulation of experience.

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