Scope of the Chapter

In the mid-nineteenth century, Abraham Lincoln was esteemed not only for his wit and rhetoric but also for physical prowess in splitting rails and wrestling. Many readers know the ballad of John Henry, born with a “hammer in his hand.” The legend celebrates the raw strength of that “steel-driving man” who, in the late nineteenth century, raced a steam drill in digging a West Virginia railway tunnel. Man defeated machine, but alas John Henry worked so hard that he “keeled over and died.” Since John Henry, skilled labor and capital have increasingly replaced manual work. As human work has been deskilled, the wage of unskilled relative to skilled work has fallen.

This chapter focuses on education, skilled labor, health, and human capital. Higher income per capita is strongly associated with lower mortality and higher school completion (World Bank 2004i:35).

Simon Kuznets (1955b:39) argues that the major stock of an economically advanced country is not its physical capital but ???the body of knowledge amassed from tested findings and discoveries of empirical science, and the capacity and training of its population to use this knowledge effectively.??? In contrast to less-developed countries (LDCs), post-World War II Japan and Germany grew rapidly, despite their physical capital ruined or depleted, because the skill, experience, education, training, health, and motivation of the labor force remained intact.

Why is labor productivity higher in developed countries (DCs) than in LDCs? Here we are not interested in productivity differences attributed to capital and land. Rather, we focus on the effect of (1) formal education and training; (2) socialization, childrearing, motivation, and attitudes; and (3) the health and physical condition of the labor force, including a section on human immunodeficiency virus (HIV) and acquired immunodeficiency syndrome (AIDS).