KM ktjj ri dit I eit

The case of fixed costs corresponds to k(t — j,j) = 2(1), j = 1, k(t — j, j) = 0,j > 2. The simplest model of specific human capital accumulation sets k(t — j, j) — k for all j. Depreciation of these effects can be accommodated in the general model.

The fixed cost model is indistinguishable from a first-order Markov model.27 The general renewal model is distinguishable from the general finite state Markov models and the generalized Polya models considered in the preceding section. Heterogeneity and the effect of exogenous variables on choices may be introduced into the renewal models in exactly the same way as discussed in the preceding sections.

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