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The Trouble with Human Capital Theory

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  • Fix, Blair

    (York University)

Abstract

Human capital theory is the dominant approach for understanding personal income distribution. According to this theory, individual income is the result of ‘human capital’. The idea is that human capital makes people more productive, which leads to higher income. But is this really the case? This paper takes a critical look at human capital theory and its explanation of personal income distribution. I find that human capital theory’s claims are dubious at best. In most cases, the theory is either not supported by evidence, is so vague that it is untestable, or is based on circular reasoning. In short, human capital theory is a barrier to the scientific study of income distribution.

Suggested Citation

  • Fix, Blair, 2018. "The Trouble with Human Capital Theory," SocArXiv ax6k7, Center for Open Science.
    • Handle: RePEc:osf:socarx:ax6k7
    DOI: 10.31219/osf.io/ax6k7
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    References listed on IDEAS

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    14. Fix, Blair, 2018. "Capitalist Income and Hierarchical Power," SocArXiv u8epv, Center for Open Science.
    15. Hellerstein, Judith K & Neumark, David & Troske, Kenneth R, 1999. "Wages, Productivity, and Worker Characteristics: Evidence from Plant-Level Production Functions and Wage Equations," Journal of Labor Economics, University of Chicago Press, vol. 17(3), pages 409-446, July.
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    Cited by:

    1. Fix, Blair, 2019. "How the Rich Are Different: Hierarchical Power as the Basis of Income Size and Class," SocArXiv t8muy, Center for Open Science.
    2. Jackline Kavoki & Dr. Evans Kiganda PhD & Dr. Destaings Nyongesa PhD, 2023. "Effect of Government Funding to Secondary Schools on Gender Parity in Kenya," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(10), pages 2320-2332, October.
    3. Blair Fix, 2021. "How the rich are different: hierarchical power as the basis of income size and class," Journal of Computational Social Science, Springer, vol. 4(2), pages 403-454, November.
    4. Fix, Blair, 2019. "How the rich are different: Hierarchical power as the basis of income size and class," Working Papers on Capital as Power 2019/02 (v.2), Capital As Power - Toward a New Cosmology of Capitalism.
    5. Fix, Blair, 2021. "The Rise of Human Capital Theory," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, issue 95, pages 29-41.
    6. Hickel, Jason & Dorninger, Christian & Wieland, Hanspeter & Suwandi, Intan, 2022. "Imperialist appropriation in the world economy: drain from the global South through unequal exchange, 1990–2015," LSE Research Online Documents on Economics 113823, London School of Economics and Political Science, LSE Library.
    7. Msomi Thabiso Sthembiso & Olarewaju Odunayo Magret & Ngcobo Xolani, 2021. "Sustaining South African Small and Medium-sized Enterprises Through Monetary Access and Literacy in the COVID-19 ERA," Folia Oeconomica Stetinensia, Sciendo, vol. 21(2), pages 57-75, December.

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