A Cautionary Discussion about Relying on Human Capital Policy to Meet Redistributive Goals

Human capital policy has come to be seen as something of a panacea: acting both as a necessary input for modern growth and an effective tool for redistribution. Canada has moved strongly in the direction of linking redistribution and human capital investment. In this paper, I investigate the empirical evidence and theoretical arguments behind the claim that increasing skills investment opportunities and tying transfers to human capital investments while decreasing traditional income support will ultimately lead to a more equal, more just society. Whether this is true, of course, will depend on the notion of justice one adopts. One of my goals in this paper is to examine the implications of the kind of policy path Canada is following under different notions of fairness. I conclude that both empirical evidence and fairness considerations indicate that human capital policy does not make good redistributive policy.