A Study On Human Capital And Specialization

Economists have studied human capital for a long time since the foundation of the famous economist, Theodore Schultz. Due to the efforts of these economists, those fields have extended to a vast span. My dissertation for the Master Degree focuses on the specialization and firm-specific human capital. Firstly, I introduce the most influential papers in the word, which is written by those economists such as Theodore Schultz, Gary Becker and J. Mincer. Then I give some branch theory developed by the later economists including Gary Solon, Frank R. Lichtenberg, Gary Becker and so on. Though I just provide a simple summary of those branches that compose the theory of human capital and intergenerational mobility, the theory of investment in schooling and training, the theory of the new economics of mortality, the theory of human capital and specialization and the theory of growth and population, it gives us an outline of the modern research of human capital research. As the firm-specific human capital is the cynosure of my dissertation, I finally pay attention to the specialization and firm-specific human capital. In this section, I begin with the specialization which results from the division of labor that emphasized by Adam Smith in his famous book- An Inquiry into the Nature and Causes of the Wealth of Nation. Moreover, I provide the development of this theory about human capital and a model that innovated by Gary Becker and K. Murphy and stressed the coordination costs.Undoubtedly, the theory of firm-specific human capital is the center of this dissertation, so I summarize those papers in this field into four parts that constitute the theory of labor turnover, the theory of investing in firm-specific human capital, the theory of wage determination and the new theory of firm-specific human capital. Then I present a model established by Prendergast Canice who design a mechanism of promotion to induce workers to invest in firm-specific human capital.Finally I modify a model written by Robert Lucas to conclude even if there is some firm-specific human capital, the growth rate of total capital and consumption per capitais steady. However the growth rate of human capital must decrease in some scale. Furthermore, I establish a simple model to explain the transform of china college education from intensive major to the extensive major. In this model I assume there are only one firm and one worker and they play mixed strategies to maximize their profits. At last they reach a mixed strategy Nush Equilibrium which demonstrates that the intensive major does harm to the worker and is indifferent to the firm. But if the firm affords the investment, the firm and the worker are all indifferent. So in most cases, the firm provides the investment of firm-specific human capital.Therefore, this dissertation is organized as follows. Chapter 1 contains a brief discussion of related literature about human capital. Chapter 2 presents the historical and current theory of specialization. Chapter 3 details the firm-specific human capital theory. Chapter 4 develops two models about the firm-specific human capital.