Abstract

The income distribution theory inherent in the linear programming assignment problem i; analyzed. In a context in which workers are assigned to machines, dual prices correspond to worker wages and machine rents. The principle which guides the assignment is contrasted with comparative advantage. Using factor analysis, wage differences are shown to depend on both worker and machine properties. The determination of wage differences is illustrated in a numerical example. The assignment theory is then compared with neoclassical and human capital theories.

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