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16of19 - Human Capital and Specialization - On-the-job training and learning by doing

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Published on Feb 10, 2011

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GARY BECKER

This the sixteenth lecture in the "Lectures on Human Capital" series by Gary Becker. This series of lectures recorded during the Spring of 2010 are from ECON 343 - Human Capital, a class taught every year by Gary Becker at the University of Chicago. In this class, Becker expounds upon the theory of Human Capital that he helped create and for which he won the Nobel Prize. Please see attached lecture notes, video annotations, and reading list for more information.

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In the first part of the lecture, Professor Becker continues to discuss the model developed in the last lecture about the marriage markets. He gives some more insights and conditions for possible results in it.

Afterwards, he introduces the concept of on-the-job training. He develops a model in which people finish school, go to the marketplace, and then receive on-the-job training. He answers who pays for the on the job training under different market and industry structures. Also, he explains why employees may be interested in investing in their own human capital while they are working. He goes through each kind of job training (firm specific, industry specific, general training, etc.) and explains under what circumstances the employee or the employer is likely to pay for it.

His model does not explicitly differentiate between learning by doing and investing in education while working because he claims that the conclusions are basically the same.

Key concepts: explicit training, firm specific training, learning by doing, matching, industry specific training, marriage market, positive sorting by education, on the job training, sorting, statistical value of life, specific training, utility levels.

Main discussions:
• Lecture 16, (09:20-11:10): Professor Becker explains graphically and intuitively the process of on-the-job training.
• Lecture 16, (15:45-18:25): Professor Becker explains graphically and intuitively how learning by doing can fit into an economic framework.

Main quotes:
• "If you look at a group of people coming out of college, they look similar. But after 20 years of work, they will look quite different."
• "There is no such thing as a free lunch...sometime the cost of the lunch is hidden...somebody may take you out for lunch and pay for it, but it doesn't make it a free lunch necessarily...you have to look for where the cost comes from."

References:
• Chapter III: Investment in Human Capital: Effects on Earnings in Becker, Gary. 1974. Human Capital. Third ed. pp. 29-58.

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Lecture Notes:
https://mindonline.uchicago.edu/media...

Reading List:
https://mindonline.uchicago.edu/media...

Video Annotations:
https://mindonline.uchicago.edu/media...

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