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GARY BECKER ON HUMAN CAPITAL

  • Yoram Weiss (a1)

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Gary Becker’s work on “human capital” started around 1960. It was motivated by the rising interest in economic growth at the time. As stated in the introduction to the first edition of his book, Human Capital, “The origin of this study can be traced to the finding that a substantial growth in incomes in the US remains after the growth of physical capital and labor has been accounted for”. This unexplained residual suggested to several researchers that unmeasured features of the quality of the labor force must also be brought into consideration. While econometricians such as Edward Denison, Dale Jorgenson, and Zvi Griliches turned to seek better data that would reduce the scope of the unexplained residual, Becker constructed a detailed and original theory regarding the possible effects of a major unobserved and all inclusive factor, termed, human capital, would have on observed outcomes such as wages and education and their variation over time and among individual types. Most of the theoretical results reported in the three editions of Human Capital, 1964, 1975, and 1995 are already anticipated in a single early paper that was published in the Journal of Political Economy in 1962.

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1. Human Capital New York : National Bureau of Economic Research ; distributed by Columbia University Press, 1964.

2. See Theodore Schultz “Investment in Human Capital” Ch. 2, The Free Press, 1971 and Zvi Griliches (1960) “Measuring inputs in Agriculture a Critical Survey” Journal of farm Economics 42, 1,411–1,433).

3. See Denison, E. (1962) “The sources of Economic Growth in the US and the Alternatives before us”. Supplementary paper No. 13 (New York Committee for Economic Development) and Dale Jorgenson and Zvi Griliches (1967) “The explanation of Productivity Change” The Review of Economic Studies, 14, 249–283.

4. “Investment in Human Capital: A theoretical analysis” Journal of Political Economy (1962) 70, 9–49.

5. “Investment in Human Capital: A theoretical analysis” Journal of Political Economy (1962) 70, 10.

6. Investment in Human Capital: A theoretical analysis” Journal of Political Economy (1962) 70, 40.

7. For a description of some of these contributions, see the surveys: “Wage Determination” by Robert Willis and “Determination of Life-cycle earnings” by Yoram Weiss in the Handbook of Labor Economics (1986), Edited by Orley Aahenfelter and David Card, North Holland, part 3, chapters 10 and 11.

8. Journal of Political Economy (1965) 73, 552–553.

9. “Estimating the Return to Schooling: Progress on Some Persistent Econometric

Problems” Econometrica, 69, 1,127–1,160.

10. Chiappori, Pierre Andre, Iyigun, Murat and Weiss, YoramInvestment in Schooling and the Marriage MarketAmerican Economic Review (2009) 99, 1,6891,713.

11. Bernard Salanie, Pierre Andre Chiappori and Yoram Weiss “Partner’s Choice and the Marital College Premium”, (2011) Discussion Paper 11-04 Columbia University.

12. For example, in 1980 at age 25, those with some college could expect to live another 54.4 years whereas the life expectancy at 25 for those with a high school degree or less was only 51. See Cutler D.M., E.R. Mera and S. Richard (2008) “The Gap get Bigger, Changes in Mortality and Life Expectancy by Education”, (1981–2008) Health Affairs 27, 350–360.

13. David M. Cutler and Adriana Lleras-Muney (2012) INSIGHTS FROM INTERNATIONAL COMPARISONS NBER Working Paper 17,738.

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GARY BECKER ON HUMAN CAPITAL

  • Yoram Weiss (a1)

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