at the collective scale and where “ex post net” is again understood before “output.”
(5.1), but not (4.1), guarantees that terms are mutually exclusive and exhaustive.
Total growth means this ex post net investment (growth of physical capital) plus growth of human capital. The latter would have puzzled us before the contribution
of Ben-Porath. Equation (4) in his 1967 paper, summarizing the first three, shows
human growth = invested consumption + self-invested work — human depreciation, (5.2)
using my terms rather than his.
Chapter 6 will argue that this equation needs to be clarified. I gave a preview in Chapter 2, and will update it now. Work is the output of human capital. Output is not always positive. It is negative whenever growth and cash flow sum to less than zero. A negative sum of these two shows unrecovered decapitalition (also called deadweight loss). That would include unrecovered human depreciation. If (5.2) meant all including negative self-invested work less all including unrecovered human depreciation, it would subtract unrecovered human depreciation twice. Then
it must be corrected either to
human growth = invested consumption + positive self-invested work — human depreciation, (5.3)
or equivalently
human growth = invested consumption + self-invested work — recovered human depreciation. (5.3a)
It is clear that Ben-Porath meant (5.3), as other evidence shows that he treated
human depreciation as unrecovered. So does all tradition, mistakenly | believe, with
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