Introduction

As the labour force ages in many of the most highly industrialized countries of the world, it is natural to consider the effects of these shifts in the age distribution of the labour force on aggregate productivity and the intergenerational distribution of wealth. In this paper and a companion paper (Flinn, 1991), we attempt to more precisely characterize the manner in which the age distribution of an economy determines the level of investment in human capital and the wealth distribution. In Flinn (1991), our focus of interest was cohort-specific investment in formal schooling. In this paper, we turn our attention to the issue of investment in general human capital on the job.

There is a large, primarily theoretical literature on human capital investment on the job; modern general statements of the theory and some empirical implications which follow from restricted versions of it can be found in Becker (1975) and Mincer (1974), for example. Human capital investment in our model will take place within an overlapping generations economy in which the process generating the cohort size sequence is unrestricted. Our focus on the effect of the cohort size sequence on human capital investment patterns was also the focus of Dooley and Gottschalk (1984), though our analysis is at the same time more ambitious in the sense of being cast in a partial equilibrium framework and less ambitious in the sense that our empirical analysis is extremely limited and makes no attempt to account for within (birth) cohort variance in human capital investment or earnings.