The research project contributes to the Konstanz research group from the point of view of formation and utilization of differentiated human capital. Within a theory based econometric analysis, this project considers both the supply side of human capital formation including (on-the-job) training activities and the demand side regarding the required employment of different skills by enterprises in consideration of substitution effects and complementarities. To be more concrete: On the one hand, the connections between the demand for heterogeneous labor, production technology, and the wage structure will be modelled on the basis of a decision theoretic approach. On the other hand, schooling and further education will be analysed in a micro-theoretic framework, explicitly using private and social returns to education. In this context, the general institutional set up matters. For example, the dual training system and the existence of wage setting mechanisms that are influenced by trade unions are to be taken into account.

The contribution of this project to the Konstanz research group on Heterogeneous Labour: Positive and Normative Aspects of the Skill Structure of Labor is twofold. Firstly new microeconometric methods are to be developed and compared that appropriately allow to evaluate the return to schooling of heterogeneous individuals. Secondly, the efficiency of human capital investments will be evaluated in the light of inadequate educational careers (further details).