Week 8 - Human Capital: General Issues

Question 1

What form of capital are we examining?

Answer 1

-skill is acting as capital and it increases productivity

Question 2

How is human capital different from other forms of capital?

Answer 2

it can’t be sold

Question 3

According to Howard Becker, who pays for the development of human capital?

Answer 3

-depends on asset specificity of skills
-if only one employer needs the skills (asset specific human capital), the employer provides the training
-for general human capital (general skills such as reading and writing), the employee pays for the training (e.g. forgone wages, unpaid internship)

Question 4

General vs Asset Specific Skills: The Army

Answer 4

general; they need basic skills relevant to many employers, like a college degree
-but also teaches asset specific skills such as firing machine guns

Question 5

ROTC

Answer 5

military pays for your college education

Question 6

Why don’t most people join the ROTC, even though it pays for your tuition?

Answer 6

You’d have to commit to the military or reserves

Question 7

What does the ROTC suggest about human capital that is generalizable to the entertainment industry?

Answer 7

-you can solve the problem of who pays for human capital if there are contracts that make it feasible for firms to pay for human capital