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Assumptions:

• utility maximization
• information about job characteristics
• worker mobility

Adam Smith and compensating differentials:

• agreeableness or disagreeableness of occupation
• amount of training required
• constancy of employment
• the trust to be reposed in the workmen
• the probability of success in the occupation

The hedonic wage model:

• indifference curves
• iso-profit curves
• equilibrium

Applications:

• measuring the value of life
• cost-benefit analysis
• employer-provided benefits

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Lecture Notes