Human Capital Theory

Topics: Wage, Employment, Labor Pages: 7 (2110 words) Published: August 25, 2009
To what extent can Human Capital Theory provide a plausible explanation for inequalities in the labour market? Illustrate your answer with examples of labour-market segmentation tied to race or gender or social class.


Human capital theory can be identified as studies of organisations, individuals or nations which accumulates stock of productive skills and technical knowledge from study of investments (Becker, 1964).By following the judgement of human capital theory it can be said that it represents a path for the individual to develop his or her charisma to the labour market .Human capital theory is used as a analysis of theoretical frame , development of competence , formal education and job tenure probably are the crucial aspects for the individual’s perceived employability. As a result investment of individuals in these respects would be essential factors in identifying their perceptions of the possibilities that exist for gaining new employment (Judge and Bretz, 1994 et al, 1995).

Efficiency losses and Gender differences:

In recent times around 50 % of woman around the world are in the labour force officially, approximately 1/3rd of all workers are constituted by women’s. Work unpaid performed by females most of them because following the tradition of division of labour within nature of employment on family farms .Although it attracts pay, men’s work is valued more than women’s. Earnings of women is normally average around 2/3rd of men’s .In general, simply 1/5th of world’s wages accrue to women partly because they are engaged usually in low paying-jobs. Still in these jobs, payment is less usually to women compare to men instead doing comparable work (Bergmann, 1971), the result of discrimination and exclusion of women are solely the gender differences in labour market, to evaluate a method the output and wage are affected under conditions of discrimination it has been projected in the context of racial segregation, According to (Tzannatos, 1988) this method can be extended to apply in context of gender on the basis of assumption that men and women have same human capital and preference. This exercise is preceded in two steps, in beginning it estimate the output in present conditions, namely, when differences occupational and wage within industries. Secondly, output is re-estimated assuming within industries are eliminated due to occupational differences, Therefore differences between two estimates of output provided when there is maximum welfare gains indicated it can be achieved, but characteristic and preferences are same of women as compare to men and equally treated in labour market.

For Example:

UNESCO 1999 In India , women around 88 % in higher education opted to majors in arts and commerce but 1 % of women choose occupations like engineering .low paying jobs are choose by majority of women in Kerala like nurses , clerks , school teachers and typists. (Dreze and Sen, 1996) Kerala which ranks first within states of India in Gender development and Human development Index, In fact female in Kerala enjoyed a better status in society than other females in rest of the part of India and although a male child is considered to be more valuable compare to female in India but in Kerala it is different case, women exceeds 1000 to males Except districts such as Wayanad and Idukki. According to census conducted in India, Kerala outnumbered men, the independence and pride among the women in Kerala has instilled in them (Jeffrey, 1987).

In Some countries, women who are married are prevented from working due to law or by strong social customs, in late 1970s and early 1980s it was true in Korea and Japan in which women had to left their jobs due to marriage (Horton, 1994), although in Korea it is no longer to discriminate against women married in dismissal and promotion, hiring in discrimination is still un punishable due to law and remained sex stereotyped in Japan...

References: Tzannatos, Z. (1988) The long run effects of the sex integration of the British labour market. Journal of Economic Studies. 15(1), 1–18
Judge, T.A
Judge, T.A., D.M. Cable, J.W. Boudreau and R.D. Bretz (1995) ‘An Empirical Inves-
tigation of the Predictors of Executive Career Success’, Personnel Psychology 48(3):
Press, 1996
Jeffrey, Robin
Horton, S. (1994) Women and Industrialization in Asia, Routledge, London
Gustaffson, R
Trzcinski, E., Alpert, W.T. (1994) Pregnancy and parental leave benefits in the United States and Canada: Judicial decisions and legislation. Journal of Human Resources. 29(2), 535–555
Mason, M.A
MacDonald, M. (1994) Social security policy and gender, Paper presented at the Gender Symposium, World Bank, Poverty and Social Policy Department, Washington DC
Goldin, C
Ehrenberg, R., Smith, R. (1987) Comparable worth wage adjustments and female employment in the state and local sector. Journal of Labor Economics 5(1), 43–62
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