Overview
Gary Becker (1930–2014) was University Professor of Economics and Sociology at the University of Chicago and received the Nobel Memorial Prize in Economic Sciences in 1992 for extending economic analysis to a wide range of human behavior. He is the founder of the human capital theory of education and earnings, the economic analysis of the family and marriage market, and the economics of crime and discrimination. His 1964 book Human Capital (Columbia University Press) established the theoretical foundations for the returns-to-schooling literature that Card (1999) and the entire modern empirical education literature builds upon.
Key Contributions / Features
- Human capital theory (Becker 1964, 1967): Formalized the idea that investments in education are analogous to investments in physical capital — workers forgo current earnings to increase their future productivity. This framework implies that the optimal schooling choice equates the marginal internal rate of return to schooling with the marginal cost (discount rate). The model generates the prediction that schooling and earnings are positively correlated due to both the causal return and ability selection.
- General vs. specific human capital: Distinguished investments that raise productivity at any firm (general, borne by the worker) from investments productive only at the current employer (firm-specific, shared between worker and firm). This distinction underpins models of on-the-job training and the lifecycle earnings profile (also developed by Jacob Mincer).
- Marriage market model: Treated marriage as a market with matching and specialization; the model predicts assortative mating on earnings capacity and positive cross-partial complementarities in household production. Referenced in Marriage Market and Assortative Mating in this wiki.
- Economics of crime and discrimination: Applied the cost-benefit framework to criminal behavior and labor market discrimination, unifying disparate social phenomena under a single utility-maximizing model.
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