Human Capital: A Theoretical and Empirical Analysis, with Special Reference to Education, 3rd Edition
Gary S. Becker
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This expanded edition includes four new chapters, covering recent ideas about human capital, fertility and economic growth, the division of labor, economic considerations within the family, and inequality in earnings.
"Critics have charged that Mr. Becker's style of thinking reduces humans to economic entities. Nothing could be further from the truth. Mr. Becker gives people credit for having the power to reason and seek out their own best destiny."—Wall Street Journal
schooling, although it must be noted that the direct costs of search, like the direct costs of schooling, are usually added to consumption rather than deducted from earnings. If firms paid the costs and collected the return, search would have the same implications as on-the-job specific training. Whether workers or firms pay for search depends on the effect of a job change on alternatives: the larger the number of alternatives made available by a change, the larger (not the smaller) is the
at different ages in terms of differences in real wage rates and returns alone. Yet presumably as a person gains (or loses) experience, knowledge, and strength with age, the production possibilities available to him also change. This section analyzes the consequences of such changes for the optimal allocation of goods and time. Let us concentrate on changes in the production functions for commodities, and assume that productive efficiency rises with age until a peak efficiency is reached, and
Market," Journal of Human Resources, 7, 3, Sumrner 1972, pp. 326-342; Lester Telscr, C0111petition, Collusion, and Galne Theory, Chicago, 1972; Masatoshi Kuratani, "A Theory of Training, Earnings, and Employment: An Application to Japan," Ph.D. dissertation, Columbia University, 1973; and L. Landes, "Male-Female Wage Differentials by Occupation," Ph.D. dissertation, Columbia Cniversity, 1973. 6 See, for example, Jacob Mincer, "On-the-Job Training: Costs, Returns, and SOlne Irllplications,"
outright gifts, that could be used elsewhere. Their cost is measured by the foregone opportunities represented by the u'h segment of S. After these funds are exhausted, investors must turn either to commercial loans in the marketplace or to reductions in their own consumption during the investment period. These funds are usually available only at considerably higher, and somewhat rapidly rising costs: they are represented by the upward sloped segment h'S. As emphasized earlier, the accumulation
the effect of background, and overstate the effect of human capital, on earnings, perhaps by substantial amounts. The Woytinsky lecture also analyzes th-e effects on inequali ty and skewness in earnings of more equal opportunity, minimum schooling legislation, and "objective" selection of applicants to scarce places in schools. In it I attempt to explain, too, why earnings are more equally distributed and less skewed than incomes from nonhuman capital. Although the formulation has some unsolved