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10of19 - Investment in Schooling and Training - Higher education and College

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GARY BECKERThis the tenth 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.---Professor Becker continues to elaborate on the decision to attend college. He also discusses hypotheses for why the cost of tuition has risen. Becker then discusses the consequences of this rise in tuition and how it affects the cost functions of different industries. He explains why many people misunderstand the causation of the rise in tuition and illustrates what he believes are the correct forces.He discusses how the recursive property of human capital is present in this context. Also, he explains why students have a better deal in these days than they had in the past. He questions if college subsidization causes a progressive taxing structure. He claims that the benefits of going to college are mostly private ones and illustrates why there are not large externalities associated with college education.He gives a theoretical and an empirical discussion about the college/high school wage gap in the U.S. He offers facts of other developed and developing countries as well. He also dicusses the extremely negative consequences of dropping out of high school: "high school drop outs are socially condemned in almost every dimension". Finally, he explains why people drop out.Key concepts: benefits of going to college, high school drop out, externalities from education, sheepskin effect, subsidies to education, rising cost of college tuition.Main discussions:• Lecture 10, (13:15-09:40): Professor Becker discusses the misunderstandings about the causes of the rise in tuition and gives some insights about the recursive property of human capital in this context. Also, he discusses issues about subsidies and externalities in the context of investment in education.• Lecture 10, (17:40-24:00): Professor Becker recommends some public policies in order to get more people to finish high school in an efficient way.• Lecture 10, (26:15-27:45): Professor Becker explains why GED programs do not work.Main quotes:• "You have an increase not only in the earnings of college graduates relative to high school graduates but you have an increase in the net benefits... the rate of return ... of the college education, despite the increase in tuition. So, I don't feel sorry for the students who have to pay this higher tuition".References:• Chapter V: Rates of Return form College Education in Becker, Gary. 1974. Human Capital. Third ed. pp. 161-204.• Salvador Navarro Lozano. Notes on Gary Becker's Human Capital and the Economy. pp. 18-21.--Lecture Notes: List: Annotations:

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