The Age of Human Capital
Gary S. Becker
THE AGE OF HUMAN CAPITAL
Human capital refers to the knowledge, information, ideas, skills, and health of individuals. This is the “age of human capital” in the n that human capital is by far the most important form of capital in modern economies. The economic success of individuals, and also of whole economies, depends on how extensively and effectively people invest in themlves.
Studies suggest that capital invested in men and women constitutes over 70 percent of the total capital in the United States. The total invested in schooling, on-the-job training, health, information, and rearch and develop-ment is surely over 20 percent of gross domestic product. Technology may be the driver of a modern economy, espe-cially of its high-tech ctor, but human capital is certainly the fuel.
An economy like that of the United States is called a cap-italist economy, but a more accurate term is human capital or a knowledge capital economy. While all forms of capi-tal are important, including machinery, factories, and fi-nancial capital, human capital is the most significant.
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4Gary S. Becker
没影点STOCK MARKET CRASHES AND HUMAN CAPITAL More than a decade ago, I ud the significance of human capi-tal to make one of my more uful short-term business forecasts. You may recall that on October 17, 1987—so-called Black Mon-day—the value of the stocks listed on the New York Stock Ex-change fell by 22 percent. On one day alone, equity wealth declined 22 percent. There was chaos in Washington and in the media. Financial magazines were predicting another Great Re-cession like the one in 1929, when the stock market also crashed.
I happened to be working on my regular monthly Business Week column during the day of the 1987 crash. So on Black Monday, I scrapped the column I was preparing and wrote one that predicted no major recession for the United States. This column ran about the same time as an issue of Business Week in which the cover story focud on a possible major depres-sion due to the crash.
grade什么意思My argument was very simple. I began by emphasizing that human capital is three-fourths, or so, of the wealth in the United States, and that the value of human capital did not em to have been much affected by the stock market crash. It is known that financial returns and human capital returns gener
ally vary largely independently of each other. If so, the crash would only affect the value of the nonhuman capital, a fraction of all wealth. By multiplying the fraction of wealth that crashed in value by the size of the fall, I showed that the total wealth of the econ-omy declined by only a few percentage points, perhaps as little as two percent. That could cau trouble, but not by itlf a major recession. This is why I predicted difficult times only for luxury goods and the like—which did happen. Three months after the crash, the economy was back on cour, and quarterly time ries on stock prices show little evidence of the crash.
THE GROWING RETURN TO HUMAN CAPITAL The modern economic environment places more of a premium on education, training, and other sources of knowledge than was true even fifty years ago. This can be inferred from
changes in the relation between education and earnings. In the United States during most of the past forty years, college grad-uates earned on the average about 50 percent more than high school graduates, and the latter earned about 30 percent more than high school dropouts. (See Figure 1 for the college–high school earnings gap.)
Wage differences between typical college and high school graduates incread from 40 percent in 1
977 to 60 percent in the 1990s. The gap between high school graduates and persons with at least a college education grew even faster , from 50 per-cent in the late 1960s to about 75 percent in recent years.The are probably the largest increas in U.S. history.
Similar trends are found elwhere toward greater demand for more skilled workers, although in Europe this has taken the form of incread unemployment of less educated and less trained workers. The gap in wage differentials by education is large in European nations for both men and women.
The global economy cannot succeed without considerable investment in human capital by all nations. Richer countries specialize in high-knowledge products and rvices, while poorer nations specialize in lower-skilled and raw material–intensive products. Still, investments in human capital are also necessary in poorer nations if they are to have a chance of growing out of poverty.
Almost without exception, studies of the economic growth of different nations show a clo relation during the past v-eral decades between economic performance and schooling,life expectancy, and other human capital measures. In particu-lar , although on the average Third World nations grew a little less rapidly than richer ones, poorer nations with more edu-cated and healthier populations man
aged to grow faster than average. Especially important for the nations are their in-vestments in elementary and condary education.
Of cour, machines and other physical capital are impor-tant. But alone they are far from sufficient to produce growth becau skilled workers and managers, and innovative entre-preneurs, are needed to operate complicated machinery, to 5The Age of Human Capital
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Gary S. Becker produce efficiently, to develop new products and process,and to utilize innovations from other countries. N eglect of human capital and world markets by most economists after World War II, and their emphasis on import substitution and protected markets, was a riously distorted view of the growth process. Ultimately it was a failed vision of what is es-ntial to achieve economic
progress and reductions in poverty.
DISTANCE LEARNING
Modern economies require that people invest in the acquisi-tion of knowledge, skills, and information not only when young but throughout most of their lives. Yet the basic meth-ods of acquiring human capital have hardly changed since the time of Socrates. For 2,500 years, teachers and students have met face to face for lectures and discussions. However,the growth of the Internet will revolutionize the system of teaching and learning by allowing “distance learning,”where teachers and students may interact cloly even though they are parated physically and in time.
The key economic advantage of distance learning over traditional on-site learning is that it saves students time.120%
100%
1980
1998
111%
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60%
40%
20%
0%
FIGURE 1. Widening Pay-Gap Between High School and
College Graduates
(S OURCE : 1980: U.S. Census Bureau. 1999: ML Growth Stock Rearch)
Studies show that the value of time spent learning is the prin-cipal cost of investment in human capital among teenagers and adults with even moderate actual or potential earnings.It is especially important for executives and highly skilled employees. Web-bad instruction eliminates regular com-mutes to schools and other teaching facilities, which can amount to more than an hour each wa
y for persons with jobs. On-line instruction also allows greater time flexibility for students to interact with cour materials, “chat ” with other students, take quizzes, and submit reports. People with full-time jobs can choo the most convenient time to do their courwork, including during weekends, before work,and after.
Thousands of Internet students could take a single, popu-lar cour, instead of the small numbers in a typical class-room. The spread of faster and, ultimately, broadband access to the Web enables the u of colorful graphics and at-tractive simulations. On-line instruction may well widen the market and rai the popularity of superstar teachers who command high audiences and very high salaries.
Distance learning appeals mainly to adults who want to take cours toward a bachelor ’s or master ’s degree or main-tain and upgrade job skills that have grown outdated.Highly skilled professionals, such as doctors, have always had to keep up with change in their fields by reading and by taking short cours. But the continual introduction of new technologies makes skills obsolescence a rious prospect for all professionals and for many other working adults.
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On-the-job training and learning offer a particularly promising on-line market. Companies have long invested in employee education, although mostly in-hou to eliminate travel time to off-site schools.
Distance learning offers an op-portunity to outsource teaching to specialized companies without taking employees away from their work. Web-bad cours are rapidly developing in information technology, fi-nance, accounting, marketing, management, the global econ-omy, and many other subject areas.
zipzap7The Age of Human Capital
8Gary S. Becker How well companies manage their human capital is a cru-cial factor in their success. Bill Gates said, “Take our 20 best people away and . . . Microsoft would become an unimpor-tant company.”
Unfortunately, the huge amounts invested by companies are not on their balance sheets becau typically they are costed as current spending rather than capitalized. They are part of “goodwill” and other residual accounting categories. Incread investments in human capital and knowledge by companies partly explains the enormous ri in the ratio of market price to book value of the asts of publically traded companies.
CONCLUSIONS
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I conclude by listing veral main points of this essay:
1.Human capital is of great importance in the modern economy.
2.Human capital has become of much greater signifi-cance during the past two decades.
3.Human capital is crucial to the international division of labor.
4.Much unmeasured learning goes on in companies and by adults.
新年快乐 英语5.People need to invest in themlves during their whole lives.
6.Distance learning will become of crucial importance to the teaching and learning process.
7.Human capital stimulates technological innovations and the high-tech ctor.
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