The Production of Human Capital and the Life of Earnings
After a brief summary of Ben Porath's 1967 model, I enquire into the empirical validity and some implications of his insights. Section 2 is an attempt to answer the question: Are the shapes and magnitudes of growth in wage profiles largely attributable to human capital investments? Section 3 test the proposition that over the working age capacity wages (i.e. wages before netting out investment) decline before observed wages do. Implied timing of labor supply provides the test the findings shed light on developments in the US labor market in the past several decades. in the section 4 some implications are drawn from Ben Porath's model for interpersonal differences and historical changes in life cycle human capital investments. the positive correlation between schooling and training, predicted by the model is found cross sections. It also shows up in parallel movements in schooling and training in the 1980's as the demand for human capital increased. Once again, observed US patterns are highlighted.
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