Showing papers on "Human capital published in 1975"

Education and Screening

Abstract: Since the advent of the human capital concept, much attention has been devoted to the relationship between income and schooling. Their positive association is one of the most consistent empirical findings of the human capital literature. The conventional view, the productivity augmenting view, is that schooling enhances earnings via the production of marketable skills. But, recent theoretical arguments have suggested the possibility that schooling's private monetary return may be informationally based.' In the most extreme form of this screening hypothesis, schooling serves only to identify those individuals who are more productive in the market, the proposition being that an individual's productivity is unaffected- by the formal schooling process. The importance of these competing explanations relates to schooling's implied social return. If schooling's sole function is informational, its social product is determined exclusively by the gain to productive rearrangements which are made feasible by the less imperfect ex ante knowledge of individual productivities. In the most extreme form of screening it is only the relationship between aggregate output and schooling's informational content that determines, along with the resource cost of schooling, the socially optimal investment in school

Human Capital and Labor Supply: A Synthesis

Abstract: It is by now widely recognized that investment decisions play a major role in the determination of individual age-earnings profiles. The purpose of this paper is to present a simple life-cycle model of investment in human capital in which leisure choices are explicitly incorporated. In so doing, we integrate two previously disparate branches of life-cycle theory: models of labor supply with exogenous wages, and models of human capital formation with exogenous leisure. Of course, to accomplish this, we must posit utility maximization as the individual's goal rather than income maximization.

Capital-Skill Complementarity, Income Distribution, and Output Accounting

Abstract: How quickly do the returns to education fall when the number of educated people rises? This has been a crucial question for the philosophy of educational planning, since the case for manpower forecasting and planning is stronger the less easy the process of substituting educated for less educated people.

Family Structures and Family Values in the Theory of Income Distribution

Abstract: This paper analyzes household decisions concerning education and bequest. Specifically, an integrated model of life-cycle savings and investment in human capital is used to investigate the effects of two institutional dimensions: (1) family generational structures and (2) family values placed on intergenerational welfare. The analysis shows that these two dimensions are, in fact, important determinants of the size distribution of income both in the short run and in the long run.

Full-Time Schooling in Life-Cycle Models of Human Capital Accumulation

Abstract: A reduced-form equation relating length of "formal schooling" to market, endowment, and ability parameters was derived for a lifecycle human capital accumulation model with alternative assumptions: (a) equal borrowing and lending rates and (b) no loans for human capital investment. Length of "formal schooling" increases when loans are unavailable. For both cases, length of "formal schooling" varies directly with length of work life, a Hicks-neutral "ability" index, and the ratio of the human capital rental rate to the price of associated inputs, and varies inversely with the discount rate, deterioration rate, and initial human capital stock.

Notes on the Tax Treatment of Human Capital

Abstract: Section 1 presents a preliminary attempt at clarifying the ways in which taxes affect human capital accumulation. Section 2 outlines a simple general equilibrium model with two capital goods - physical and human â€" and the saving corresponding to each, to begin to deal with these issues. Once human capital is viewed as an alternative source of wealth and hence human capital investment as a source of current saving (re-sources withdrawn from current consumption to help increase future output),the old issue of the differential tax treatment of alternative types of capital arises. Sensible tax policy with respect to the taxation of either physical or human capital must take into account the tax treatment of the alternative asset. Section 3 outlines some points of departure for such an analysis.

Manpower Obsolescence: A New Definition and Empirical Investigation of Personal Variables1

Abstract: Of twelve major determinants of managerial and technical job obsolescence, high need achievement and high levels of organizational participation were found to be the major contributors to nonobsole...

Capital formation by expenditures on formal education, 1880 and 1890

Abstract: This study has been concerned with the estimation and analysis of expenditures on formal education. The United States has always been considered a world leader in the educational attainment of the mass of its populace. These beliefs are confirmed at the aggregate level as it is shown that $314 million and $515 million of explicit and implicit expenditures were made on all levels of formal schooling in 1880 and 1890, respectively, in current prices. The 1880 estimate is 3.3 percent of Gallman's GNP estimate, and 19 percent of gross capital formation; and the 1890 estimate is 4.2 percent of GNP and 20 percent of gross capital formation. However, a major contention of this work is that exclusive attention to the impressive aggregate commitment to schooling in the United States neglects the fact that there were huge state-by-state and regional variations in this commitment. Much of this thesis has been devoted to developing an economically sound framework for calculating the costs of schooling. Then data from the censuses, various wage surveys, and Reports of the Commissioner of Education were applied to the framework to obtain cost estimates on a state-by-state basis. The two main components of schooling costs which were estimated were foregone earnings (opportunity costs of students while attending school), and direct resource costs of schooling (operating costs as well as implicit interest and depreciation). Data were available for education in cities of over 7500 in 1880 and over 8000 in 1890; and all education not carried out in these cities was placed in the rural category. Elementary school students aged 10 and older were assumed to be potentially in the workforce had they not been in school. To the individual, the earnings sacrificed because of school attendance are the major cost influencing his decision whether or not to enroll. It is this cost which has been measured here. Hence, the input of time into the production of human capital made by students who attended when they could not have been earning income by spending their time working elsewhere has not been valued. Opportunity costs are defined as "what income was foregone" rather than "what time was put in" by the students. Opportunity costs were included for a state's agricultural sector only where the length of the school year relative to the number of days when work was available on the farms implied that students were foregoing earnings while attending school. However, the earnings foregone aspect of costs of schooling still comprised 58.2 percent of total costs in 1880 and 56.8 percent of total costs in 1890.

Wage reduction, unemployment and specific human capital

Abstract: This paper re-examines the specific human capital hypothesis concerning short-run employment variation to analyze the circumstances in which wage reductions and/or layoffs will occur. By relaxing the usual assumption of downward wage rigidity, we show that the specificity of training influences the attractiveness of wage reduction compared to job separation. The choice of adjustments is analyzed and implications are drawn concerning the impact of the level of specific skill and of other factors on the choice and on the magnitude of such wage reductions as occur. These implications are tested with data on the Seattle recession of 1970-72.

The Relation of ‘Human Capital’ Preservation to Health Costs*

Abstract: . The concept of 'human capital' has evolved in economics as a way of measuring the value society places on an individual. This value, it is argued, constitutes a real but seldom discussed limit on how much money either an individual or society will pay for the health costs of an individual. Conversely, it can be argued that the capacity of the health system to preserve ‘human capital', as created by nature and nurture and by ‘investments’ in education and training, is an economic justification for health costs, just as military costs are justified for the defense of the population. In the latter instance, the greatest public health benefit for the dollar would be obtained by Pareto optimal expenditures. Similarly a microeconomic model for the clinical process involved in diagnosing, treating and rehabilitating the diseased individual is suggested that relates the time consumed by the elements of the clinical process to the probabilities of maximizing the preservation of the greatest number of functional man-days obtainable for an aging individual's cohort. For the model to work there would have to be an economic incentive for the health provider to engage in objective-oriented, interdisciplinary, cost-effective actions in the clinical process that would minimize the diseased individual's downtime and maximize his functional longevity in an operations research framework.

Schooling as a Wage Depressant

Abstract: We investigate the relationship between current schooling and current wage rates. Casual observation seems to reflect a discontinuity in wage rate growth which occurs when an individual completes school and joins the labor force as a permanent member. This suggests that the time spent in work while attending school is in some sense secondary. Here, the marginal value of the individual's time is considerably lower than the average value of his time. The problem is essentially one of "anti-complementarities" between the production of human capital through formal schooling and working in the primary occupation. More generally, the productivity of an individual's time in one endeavor is not independent of how the rest of his time is spent. If this is the case, students will be willing to accept lower paying jobs which do not greatly diminish the productivity of school time in lieu of jobs offering higher wages at the cost of a greater reduction in school time productivity. The wages of students, other things constant, are about 12% lower than those of non-students. The magnitude of this wage differential is surprisingly large and warrants investigation on empirical grounds alone. This paper explores the empirical relationship and examines various explanations for it. Finally, implications of the analyses are discussed.

Economic and Demographic Effects on Investment in Higher Education

Abstract: fiscal stringency are the underlying influences on the level of investment to be investigated in this paper. The relation of these underlying influences to human capital formation and to new aspects of investment behavior will be of interest to economists, whereas the current and future fiscal implications of these influences for institutions are more likely to be of interest to college administrators and others interested in higher education. The two most pervasive influences on real investment in higher education are found to be real family income and the percent of college-age young adults (and veterans) in the population. The influence of real income is well known to be consistent with prior cross-section findings. But it has a reasonable rationale, given imperfect capital markets for student loans, and implications for the future which normally have not been fully taken into account. Instead, the demographic effects following declines in the fertility rate which are seen to be influencing primary and secondary levels are often given almost exclusive emphasis. A third influence coming from public desires to increase access, represented by state and local support of junior colleges and also by the new expansion of the federal Basic Economic Opportunity Grant program, is significant. Fourth, although real interest rates have been a minor i fluence, and then only at private institutions where student borrowing has been more important, increases in prices raise costs to educational institutions and also curtail con-

The Impact of Income Taxes on Labor's Productivity: A Human Capital Approach:

Abstract: This paper explores the impact of several income tax policies on the acquisition of personal skills within the framework of a life-cycle model of human capital accumulation. The analysis considers ...

Human Wealth and Human Capital

Abstract: In this paper, a few theoretical issues will be raised regarding the relationship between the distribution of human capital and that of human wealth. Special attention will be paid to the empirical implications of the analysis.

The Economic and Financial Implications of Recurrent Education—A Critical Comment

Abstract: (1975). The Economic and Financial Implications of Recurrent Education—A Critical Comment. Studies in Adult Education: Vol. 7, No. 2, pp. 101-116.

Investment in education, national strategy options for developing countries

Abstract: The expansion of investment in formal education has been phenomenal in the last two decades and is continuing in most developing countries. Serious financial problems have arisen from the massive costs. Foreign exchange costs become serious when the expansion of secondary and higher education forces maintenance of ever larger numbers of expatriate teachers and imported school equipment and supplies. Reducing the rate of expansion, however, causes middle class parents to become outspoken critics, and these citizens are usually the main source of government support. Teachers, usually the largest single group of wage earners in a poor country, also are a politically potent element when changes are proposed. Finally, recent research suggests that schooling has not been as effective in promoting cognitive achievement, as measured by school tests, as had been expected. Nonschool factors, such as parental behavior, nutrition, and peer group experience have had an unexpected impact, while traditional school inputs have been insignificant in determining differences in student scores. Suggestions are made for three major areas of action to increase the value of human capital with optimal use of educational resources. Numerous references.

Estimating the Human Capital Associated with an Organization

Abstract: (1975). Estimating the Human Capital Associated with an Organization. Accounting and Business Research: Vol. 6, No. 21, pp. 48-56.

The stability of inequality

Abstract: The stability of inequality is a source of distress to all sensitive egalitarians. This stability is particularly distressing in the face of measures which are designed to reduce inequality. In the United States, for instance, there is a strong egalitarian bias, which de Tocqueville pointed out many years ago, in the political and social spirit of the society, but in spite of this the relative distribution both of income and of capital has exhibited remarkable stability, at least in the last 25 years. Figure 1 shows this almost unbelievable stability in the relative income shares. Figure 2 suggests a similar stability in the distribution of capital, though it is harder to get complete data on this; of course if we include human capital, the situation becomes much more complicated.

An Empirical Analysis of Income Expectations and Interstate Migration

Abstract: Income expectations have been examined at considerable length as a result of their central role in the "permanent income" hypothesis formulated initially by Friedman and in the "life cycle" hypothesis formulated by Ando and Modighani. Income expectations have also been investigated in terms of their impact on a number of other issues, including investment in human capital, the efficacy of economic stabilization policies, and migration. This paper seeks to extend the latter body of literature by investigating how and to what extent certain income expectations proxies may influence human migration decisions in the United States.