Talk:Human capital/Archives/2016

Structure of this article

This article deals with three aspects of Human capital:

1. At a philosophical level about its role versus financial capital - here is where the Karl marx citations come in.

2. at a national level - how countries can improve their standing in the world

3. at a business level - how companies can manage and grow their intangibles.

Can such an article be split? (I am competent to deal with the 3rd aspect, but certainly want to stay awy from political controversies)

GioCM (talk) 18:41, 5 August 2015 (UTC)

Is the phrase "Human-Capital" just political rally cry? Comment

I have to speculate the phrase was introduced as a response to economic theories that didn't represent workers' as having value, only as a cost, within economic activities. Spence's Signaling seems to cover the choice to establish relationships, networks, & ongoing dynamics. It doesn't appear to provide ongoing measurements of values.

This article seems lost as to how to define and thus measure Human-Capital. It bumps around the history of the Human-Capital. The Wikipedia B classification seems to reflect this. It senses the wandering through the subject in the sum of it. What that is really seeing is that "Human Capital" as a definition, has not been defined.

One idea for modeling contributions of intangibles to economic activity is to model emergence from the dynamics of change. Economic boom-bust cycles or value bubble histories appear rooted in intangibles. These combined macro-micro events aren't yet handled. Billions of signals pass through networks. Reactions and results are emergent productions of those events.

Athletes' changing value throughout a career is an example. Signaling through achievements and responses indicate value. How to measure and over what time will the value exist?

The ideas of complexity theory, complex adaptive systems(John Holland), should provide a modeling framework. A general outline for this modification to economics is in the book "The Origin of Wealth" by Eric D. Beinhocker(see summary table page 97). These incomplete but evolving ideas may handle modeling of dynamic economic events and associated values.

(- Cheers, John S Wolter (talk) 15:44, 19 March 2016 (UTC)) — Preceding unsigned comment added by Johnswolter (talk • contribs)

Untitled

This article clearly needs work. The explanation of Human Capital is sadly lacking in the Introduction and I saw no subsequent section expanding on the introductory statement. Instead, there is a brief statement followed by a mishmash of criticisms and contrary ideas.

Is this an Encyclopedia article or someone's effort to trash ideas and obfuscate the matter?

I studied Economics in the '60s. The concept of Human Capital was important to me during my entire career analyzing real estate and vast quantities of vacant land in Alaska (which is often considered a Third World Country for many valid reasons). The indigenous residents, Alaska Natives, were overrun by Russians (in the southern part of this vast land), then the American colonists came in the 19th and 20th centuries. The concept of Human Capital made a huge difference in the economic development of an area with a human population less than one person per square mile. (5,280'x2)

The Pulitzer Prize-winning book "Guns Germs and Steel" by Diamond demonstrates Human Capital in a very interesting light.

I'd like to see a good Wikipedia article, not the sadly lacking text I see. On a good day, I can do a bit of research and write well, but age and illness combine to limit my time devoted to this task. I am willing to help someone skilled at writing articles in Wikipedia format. My area of expertise lies in the field of land economics.

//Don K. (talk) 08:54, 4 October 2014 (UTC)

This article addresses human capital exclusively from the standpoint of economics. Human capital (and human capital management) is also a major concept in organizational management, distinct from human resources and human resources management. — Preceding unsigned comment added by 155.206.114.147 (talk) 13:55, 4 May 2015 (UTC)

Dr. Hanushek's comment on this article

Dr. Hanushek has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

This article is completely incoherent. It is the worst entry I have ever read in Wikipedia. It is a sequence of random thoughts, reflecting individual ideas and generally lacking any references. It has sections that cannot be understood; sections that are very poorly written; and combinations of disjoint thoughts. There is no way to salvage this topic from what is currently there. It is an important topic that needs attention.

We hope Wikipedians on this talk page can take advantage of these comments and improve the quality of the article accordingly.

Dr. Hanushek has published scholarly research which seems to be relevant to this Wikipedia article:

• Reference : Hanushek, Eric A. & Woessmann, Ludger, 2010. "The Economics of International Differences in Educational Achievement," IZA Discussion Papers 4925, Institute for the Study of Labor (IZA).

ExpertIdeasBot (talk) 14:45, 21 May 2016 (UTC)

Dr. Terjesen's comment on this article

Dr. Terjesen has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

Jacob Mincer's academic affiliation (Columbia University) should be mentioned at the outset, but many academics would probably place emphasis on Becker, and mention Mincer only later note Mincer's contributions together with others.

I would get rid of "It is an aggregate" and instead use "Human capital is an aggregate..." There is a giant literature on human capital and gender which is completely missed here, and could at least be referenced with a subsequent page. For example, this gets into literature on human capital and career trajectories, and differences for men and women in terms of human capital stocks and developments over time. There is also a giant literature on human capital and entrepreneurial propensity which could easily merit its own Wikipedia page.

I do edit Wikipedia pages from time to time, but only in areas where I would consider myself one of the top 50 subject matter experts. I know human capital but I am more familiar with sub-topics of human capital like those mentioned above.

We hope Wikipedians on this talk page can take advantage of these comments and improve the quality of the article accordingly.

Dr. Terjesen has published scholarly research which seems to be relevant to this Wikipedia article:

• Reference : Siri Terjesen, 2007. "Building a Better Rat Trap: Technological Innovation, Human Capital and the Irula," Jena Economic Research Papers 2007-031, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.

ExpertIdeasBot (talk) 11:12, 28 May 2016 (UTC)

Dr. Gomes's comment on this article

Dr. Gomes has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

The article would benefit from a few refinements:

1) First paragraph: Human capital, in economics, is in fact a term popularized by the mentioned authors, but a few references to their most significant work in the field should be incorporated: e.g., Becker, G.S. (1962). “Investment in Human Capital: a Theoretical Analysis.” Journal of Political Economy, vol. 70, pp. 9-49; Mincer, J. (1958). “Investment in Human Capital and Personal Income Distribution.” Journal of Political Economy, vol. 66, pp. 281-302. 2) First paragraph: it is said that Gary Becker is an economist from Chicago, but no reference to the affiliation of Jacob Mincer is mentioned. 3) Fourth paragraph: it is not clear how the signaling theory of Spence functions as a critique to the concept of human capital. A clarification is required. 4) The fifth and sixth paragraph, which discuss the relation between the importance of the economic sectors and human capital are poorly written and confusing. They need to be rewritten in a more intelligible form. 5) In the ninth paragraph, in the sentence ‘However it is broken down or defined, human capital is vitally important for an organization’s success …’ I believe that the word ‘However’ should be replaced by the term ‘Independently of how …’. 6) In the section Competence and Capital, not only references are missing, but the text is confuse: what does the following sentence mean?: ‘The introduction is explained and justified by the unique characteristics of competence …’

7) In the cumulative growth section, I’m not sure whether the reference to India is relevant from the point of view of what an encyclopedia entry relating the concept of human capital must contain.

We hope Wikipedians on this talk page can take advantage of these comments and improve the quality of the article accordingly.

Dr. Gomes has published scholarly research which seems to be relevant to this Wikipedia article:

• Reference : Tiago Neves Sequeira & Alexandra Ferreira Lopes & Orlando Gomes, 2012. "A Growth Model with Qualities, Varieties, and Human Capital: Stability and Transitional Dynamics," CEFAGE-UE Working Papers 2012_04, University of Evora, CEFAGE-UE (Portugal).

ExpertIdeasBot (talk) 12:42, 7 June 2016 (UTC)

Dr. Breton's comment on this article

Dr. Breton has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

This article is poorly organized and conceptually confusing, possibly the worst Wikipedia article I have ever seen. I think most of it should be eliminated, but I hesitate to make this decision myself. In particular, the attempt to connect Marx to human capital is not appropriate. I could try to rewrite the article, but it would be much shorter.

We hope Wikipedians on this talk page can take advantage of these comments and improve the quality of the article accordingly.

We believe Dr. Breton has expertise on the topic of this article, since he has published relevant scholarly research:

• Reference : Theodore R. Breton, 2014. "Schooling and Economic Growth: What Have We Learned?," DOCUMENTOS DE TRABAJO CIEF 010923, UNIVERSIDAD EAFIT.

ExpertIdeasBot (talk) 19:38, 1 July 2016 (UTC)

Dr. Ono's comment on this article

Dr. Ono has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

The article begins with the following note:

"This article needs attention from an expert on the subject. The specific problem is: This article barely defines the concept of Human Capital, then attacks the concept with a mishmash of sentences. (October 2014)"

I completely agree with this assessment. Frankly, this article is a mess. It looks like multiple people took a stab at the subject and there is no coherent thread. The core concepts are mixed in with other bits of random information and critique which seem only tangentially important. The criticism kicks in rather early, in the fourth paragraph, although the concept has not been fully explained.

Section on “Marxist analysis” is completely off the mark, and should be removed. There may be a remote link between Marxist thought and human capital (as with anything for that matter), but it is definitely not a mainstream view. The photograph of an advertisement from Kuala Lumpur is in Chinese, and I’m sure that it is incomprehensible to most people. The photo has little to do with human capital, and can be removed.

Section on “Importance” is actually one very long paragraph and hard to read. This paragraph requires considerable editing.

Section on “Cumulative growth.” Sub-section on India seems rather abrupt and random.

Section on “Criticism.” There is a discussion on specific versus general human capital. Why is this included under “criticism”? This is an important distinction, and should be discussed earlier in the article.

[Suggested reviewers]

Matthias Doepke, Northwestern University

We hope Wikipedians on this talk page can take advantage of these comments and improve the quality of the article accordingly.

We believe Dr. Ono has expertise on the topic of this article, since he has published relevant scholarly research:

• Reference : Ono, Hiroshi, 2000. "Are Sons and Daughters Substitutable? A Study of Intra-household Allocation of Resources in Contemporary Japan," SSE/EFI Working Paper Series in Economics and Finance 397, Stockholm School of Economics, revised 10 Feb 2003.

ExpertIdeasBot (talk) 17:57, 26 July 2016 (UTC)

Dr. Pfeifer's comment on this article

Dr. Pfeifer has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

The article should distinguish more precisely between micro and macro perspectives and between investments and returns. Modern labor and education economics also includes market imperfections and non-monetary returns to human capital.

Additional literature:

"New training literature" such as papers by Acemoglu and Pischke: Acemoglu, D., Pischke, J.-S. (1998). Why do firms train? Theory and evidence. Quarterly Journal of Economics 113(1), 79-119. Acemoglu, D., Pischke, J.-S. (1999a). Beyond Becker: training in imperfect labour markets. Economic Journal 109, F112-F142. Acemoglu, D., Pischke, J.-S. (1999b). The structure of wages and investment in general training. Journal of Political Economy 107(3), 539-572.

Research by James Heckman about early childhood interventions and returns (e.g., in: Giving Kids a Fair Chance. Cambridge, MA: MIT Press, 2012.).

We hope Wikipedians on this talk page can take advantage of these comments and improve the quality of the article accordingly.

We believe Dr. Pfeifer has expertise on the topic of this article, since he has published relevant scholarly research:

• Reference : Christian Pfeifer & Simon Janssen & Philip Yang & Uschi Backes-Gellner, 2012. "Training Participation of a Firm's Aging Workforce," Economics of Education Working Paper Series 0080, University of Zurich, Institute for Strategy and Business Economics (ISU).

ExpertIdeasBot (talk) 18:57, 26 July 2016 (UTC)

History

The concept of human capital is an old one and dates at least as far back as the writings of Adam Smith. In Smith’s fourth definition of capital, he wrote: “The acquisition of … talents during … education, study, or apprenticeship, costs a real expense, which is capital in [a] person. Those talents [are] part of his fortune [and] likewise that of society”. However, the term “human capital” did not become a serious part of the economists’ parlance until the late 1950s, when the term was popularized by the seminal writings of Jacob Mincer at Columbia University , along with Gary Becker and Theodore Schultz at the University of Chicago.

Definition and core concepts

In neoclassical economic analysis, capital is a durable good, produced through costly investment, and which generates a current and future flow of output and income for its owner. By analogy, human capital is the stock of such capabilities embodied in a human being. Human capital includes a person’s productive knowledge, cognitive and non-cognitive skills, health, and longevity. Under a broader definition, human capital also includes one's values, habits, social network, and other nontransferable resources and capacities that affect one’s labor productivity. Human capital may be produced through investment in education, on-the-job training, work experience, and health investments. Other determinants of human capital include innate ability, parental investment, neighborhood environment, and peers.

Like capital, human capital is a durable stock acquired through costly investment, yielding returns over the course of one's lifetime. However, human capital is conceptually distinct from capital because human productive capacities cannot be separated from the individual. In modern free societies, a person cannot sell a legally binding claim on future earning power. The ownership of human capital is therefore restricted to the person with the productive capacities. For this reason, the exchange of labor services in human capital theory is typically analyzed as rental market transactions. Wage payments are viewed both as rental payments for the utilization of human capital and as the returns to the initial human capital investments.

Central to human capital theory is the idea that economic agents choose whether to forego current labor earnings to invest in human capital in hopes of becoming more productive and obtaining higher future labor earnings. For instance, workers may choose additional schooling or jobs that offer training but lower compensation in order to increase their productivity and future earnings. As such, the theory of human capital investments in closely related to the theory of capital investments. Economics agents respond to market conditions and perceived returns when they choose whether to go to school and invest in their health.

Applications of human capital theory

Human capital theory has been widely applied in labour economics, for example, to explain features of the earnings distribution. The concept of human capital has found important application in developmental economics and economic history.

Human capital investments and the life-cycle earnings distribution

According to human capital theory, workers forego earnings early in life to invest in human capital with the hopes of gaining higher future earnings. Since human capital persists throughout one's life but becomes unproductive upon one's death, the returns to human capital investments decline over one’s lifetime. This observation helps to explain why workers’ earning profiles increase most rapidly early in life and plateau over their life-cycle. That the earnings of educated workers are higher than uneducated workers can also be explained by the necessity of compensating workers for their foregone income while invest in human capital..

Human capital and economic growth

Further information: Economic growth § Human capital and growth

The idea that individuals may accumulate human capital has influenced the analysis of economic growth. Many recent theoretical and empirical analyses of economic growth attribute a major role to a country's level of human capital, i.e. the collective production knowledge and skills of the population, in driving economic development. This literature contrasts with the Solow-Swan model, which attributes economic growth to “exogenous” productivity improvement and does not explain why technology improves over time.

Alternative views of human capital

Contemporary economists use a few alternative/complementary ways to think about human capital.

1. The Beckerian View: In Gary Becker's economic model, human capital directly enters the production function and increases a worker’s productivity in all tasks, though possibly differentially in different tasks, organizations, and situations. In this view, human capital is representable by a unidimensional object, such as the stock of knowledge or skills.

1. The Gardener view: Social psychologist Howard Gardener, who contributed to the development of multiple-intelligences theory, emphasized how many geniuses/famous personalities were very “unskilled” in some other dimensions. According to this view, human capital is not unidimensional, since there are many dimensions or types of skills, e.g. physical and mental; cognitive and non-cognitive.

1. The Schultz view: Theodore Schultz viewed human capital as the capacity to adapt. According to this approach, human capital is especially useful in dealing with “disequilibrium” situations, or more generally, with situations in which there is a changing environment, and workers have to adapt to this.

1. The Bowles-Gintis view: In a neo-Marxian critique of human capital theory, Samuel Bowles and Herbert Gintis argued that education does not lead to higher wages by increasing human capital, but rather by making workers more compliant and reliable in a corporate environment. Workers are rewarded based on their capacity to work in organizations, obey orders, in short, adapt to life in a hierarchical/capitalist society. According to this view, the main role of schools is to instill in individuals the “correct” ideology and approach towards life.

1. The Spence view: Michael Spence advanced a theory of “job market signaling” to explain the correlation between educational achievement and earnings According to signaling theory, education does not necessarily lead to increased productivity, but rather acts as a mechanism by which workers with superior innate abilities can signal those abilities to prospective employers and so gain above average wages.

The first three views are quite similar, in that “human capital” will be valued in the market because it increases firms’ profits. In many applications, labor economists’ view of human capital would be a mixture of these three approaches. Even the Bowles-Gintis view is similar. Firms would pay higher wages to educated workers because these workers will be more useful to the firm. The Spence view is quite dissimilar, however. According to this view, education is rewarded merely because it provides a signal of productive capacity to firms.

Further reading

• Sherwin Rosen (1987). "Human capital," The New Palgrave: A Dictionary of Economics, v. 2, pp. 681–90. [1]
• Becker, Gary S. (2008). "Human Capital". In David R. Henderson (ed.) (ed.). Concise Encyclopedia of Economics (2nd ed.). Indianapolis: Library of Economics and Liberty. ISBN 978-0865976658. OCLC 237794267. {{cite encyclopedia}}: |editor= has generic name (help)
• Daron Acemoglu and David Autor. “Lecture in Labor Economics” [2]
• Claudia Goldin (2016). “Human Capital.” In: Handbook of Cliometrics. Heidelberg, Germany: Springer Verlag. [3]

Criticism of human capital theory

Critics of human capital theory argue that many differences in remuneration observed in the labor market cannot be attributed to differences in human capital. Wage payments may not reflect the rental value of human capital due to compensating differentials, discrimination, human resource management concerns, and labor market imperfections due to monopsony and information asymmetry.

Mr. Wong's comment on this article

Mr. Michael B. Wong is an economics graduate student working with Dr. Josh Angrist and Dr. David Autor at MIT. He has reviewed this Wikipedia page, and provided us with the following revision of the article to improve its quality:

{{quote|text=Human capital is a concept in economics that refers to the stock of human capacities that contributes to a person’s productivity. The notion of human capital, popularized by Gary Becker, Theodore Schultz, and Jacob Mincer in the late 1950s, is the extension of the theory of capital and investment to human agents of production. According to human capital theory, individuals make costly investments (e.g., in education, training, health) to improve their own future labor productivity and thereby earn higher incomes.

Dr. Angrist's comment on this article

Dr. Angrist has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

this article seems to miss the underlying economics

To economists, human capital is an investment in human productive capacity that has costs and generates a return. The theoretical notion of human capital aligns closely with the theory of investment in any sort of capital, where current income is foregone in the hopes of getting more back later. This has a precise theoretical meaning, its not a term we think of as vernacular or jargon. Much of the entry is besides the point - esp everything starting with "marxist analysis". The article doesn't appear to have been written by an economist.

https://drive.google.com/file/d/0B8-wWhGFpGYCRnY3MTZyRE0wSDA/view?usp=sharing

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Dr. Angrist has published scholarly research which seems to be relevant to this Wikipedia article:

• Reference : Abdulkadiroglu, Atila & Angrist, Joshua & Pathak, Parag A., 2012. "The Elite Illusion: Achievement Effects at Boston and New York Exam Schools," IZA Discussion Papers 6790, Institute for the Study of Labor (IZA).

ExpertIdeasBot (talk) 03:01, 28 May 2016 (UTC)