Rational Choice, Learning-By-Doing and the Personal Distribution of Income

Abstract

This paper examines the role of individual choice in the theory of distribution. It is demonstrated that an empirically tractable model of earnings can be derived from learning theory in the absence of the rational choice or investment paradigm. The paper suggests that, in the context of an imperfectly competitive labour market, the primary role of learning on-the-job is as a labour augmenting input to the production process. In such a context therefore, there is little scope for exercising individual rational choice. Accordingly, the paper concludes that the human capital, post-school, 'self-investment' hypothesis has limited application to the theory of income distribution.