Chapter7 - IIIB Causes edit Master Differences: Click toof...

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Click to edit Master subtitle style IIIB Causes of Earnings Differences: Human Capital
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In this chapter we will learn What is human capital? Relationship to earnings Relationship to occupation Gender & Education Explaining earnings differences
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What is Human Capital? Any skills acquired by individual that increase well being acquired through education job training experience
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unlike physical capital, human capital is mobile cannot be sold or traded like physical capital human capital depreciates skills become “rusty” skills become obsolete
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Specific human capital skills for a particular job (or firm), not easily transferred. Examples: plumbing, knowledge of U.S. tax law, GVSU Gen Ed General human capital skills that are broadly applicable reading comprehension computer skills public speaking
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we acquire skills, and “rent” them to employers skills imply a certain productivity and thus a certain wage gender earnings gap women acquire less human capital than men women acquire different human capital than men and it is less valued in markets
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Human capital and earnings education/training is an investment forgo wages & pay tuition in return for higher future earnings rate of return to college 9 to 16% why? skills are acquired degree signals that individual is capable of acquiring specific human capital on the job
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experience age earnings profile earnings increase with age, indicates value of experience earning flatten with age -- skills depreciate over time -- early years of experience most important
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age earnings profile age earnings
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Chapter7 - IIIB Causes edit Master Differences: Click toof...

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