Main Content
Lesson 04 - Human Capital: Investments in Education and Training
Lesson 04 - Human Capital: Investments in Education and Training
Previous lessons provided analysis of the labor supply decisions of individuals as part of households. Before we leave the supply side of the labor market, Lesson 04 examines one other critical decision made by individuals: investment in their education and training. Why is this important and how does it influence the labor supply and hours decisions? Why do firms provide some types of training to workers for free and does not subsidize other types of training and education at all? In addition to providing analysis of these questions, the discussion of human capital and education has important implications in the discussion of wages and inequality coming up in future lessons.
Topics Covered
- What is human capital?
- Investment in human capital, individuals
- Investment in human capital, employers
Reading Assignment
- Lesson 04 Commentary
- Text(s)
- Contemporary Labor Economics: Chapter 4: Labor Quality: Investing in Human Capital, pp 85-125.
- E-Reserve Resources
Required - Blau, Winkler, and Ferber. Economics of Women, Men, and Work: PartialChapter 6: Differences in Occupations and Earnings: The Human Capital Model. pp. 190-193.
Optional (not required)
- Cappelli, Peter. (2008). Schools of dreams: More education is not an economic elixir. Issues in Science and Technology, 24 (4), 59-64.
- Hilton, Margaret. (2008). Skills for work in the 21st century: What does the research tell us? The Academy of Management Perspectives, 22 (4), 63-78.
Learning Objectives
After successfully completing this lesson you will be able to:
- Describe and discuss the relationship between worker earnings and education level.
- Describe how to calculate the return (benefit minus cost) of investment in human capital.
- Summarize and critique human capital theory.
- Compare and contrast general and firm-specific training.