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    What is meant by investment in human capital? Use this concept to explain (a) wage differentials, and (b) the long-run rise of real wage rates in the United States.

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    Investment in human capital are activities that increase workers' productivity. Most commonly, this is education and training. Healthcare could certainly qualify as well. Sick people aren't going to be very productive.

    Within an economy workers who represent greater human capital will command higher wages. They can take specialized jobs which often allow them to be more productive. There are fewer of them for any particular specialized job, since higher education is always specialized, and students pick different majors. Those who do are less ...

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    The solution discusses what is meant by investment in human capital.