The present paper has developed a two-period model of specific human capital incorporating the decision of the firm on the amount of investment in on-the-job training, and analyzed the effects of the specificity of the skill, formal schooling and unions on the wage and the quit rate by operating compartive statics. This attempt is valuable particularly in discussing the problem of why earnings and quits differ among workers and industries, since the amount of investment in on-the-job training is a key factor in the wage determination.
One of the main conclusions is that an increase in the specificity of the skill leads to an increase in the wage rate of skilled workers because it incites the firm to invest more in them through reducing their quit possibility. The effects of formal schooling on the wage and the quit rate depend on how it affects both the efficiency of on-the-job training and the difference in productivity between the present and the alternative employment. For, if the productivity increase is sufficiently larger in the alternative employment than in the present, then the firm will refrain form investing in highly educated workers.
We have tested the implications of our model by estimating it in the structural form, using the procedures of OLS and INST, and by computing White's statistic as well as t-ratio. In so doing, the bonus-earnings ratio and firm size were used as a proxy for the amount of specific training.
One result of the analysis is that, as our model has described, the strong interaction between wages and quits plays a crucial role in the determination of earnings in the Japanese labor market, which is often characterized by the“rigid”institutions, such as the nenko-wage and the lifetime employment system. It is also interesting that both the firm-scale dummies and the bonusearnings ratio are significantly influential in the quit equations while not in the wage equations. This supports one of the important implications of our model that the specificity of the skill does not affect earnings directly, but indirectly through changing the quit possibility of skilled workers.

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In this paper, we have the following results. (1) In general, the correspondeces between capital and class, and capital and exploitation don't hold in our model (these relations hold in Roemer (1982)), but the correspondence between class and exploitation holds. (2) We have two examples of nonexistence of exploitation with positive profit (the counter-example of Fundamental Marxian Theorem in our model) and an example of existence of exploitation with identical capital endowments. (3) We get some propositions about the relationship between three concepts, free to choose, freedom to attain one's purpose and non-existence of exploitation.

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In this paper, we analyze the following problem, using Alonso-Wheaton type two-city model; when the change of the unit transport cost in a city affects not only the utility level of its residents but also that of the residents in the other city through inter-city migration, how should its change be evaluated?
We get the following results: Under an optimal inter-city income transfer, the benefits of the change of the unit transport cost in a city is measured correctly by the partial equilibrium measure. But, otherwise, its measure becomes over (under)-estimated if the marginal external effect of migration in the city is larger (smaller) than that in the other city.

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