All studies of human capital, as far as I know, effectively treat human depreciation as deadweight loss. Ben-Porath’s model seems no exception. How does he model pay? He multiplies human capital by a productivity factor, and then again by the fraction marketed for pay rather than self-invested. That gives what I call realized work. Pay, if] am right, measures gross realized work. That is the main amendment I would
propose for his model.
Ben-Porath’s first three equations summarize what I call the growth truism (6.14).
In my terms, not his, he models
human growth = invested consumption + self-invested work — human depreciation.
He means positive self-invested work in the form of learning. Meanwhile the inalienability of human capital leaves its depreciation as its only avenue of decapitalization. Invested consumption corresponds to gross transfer in as meant in the growth truism (6.14c) while self-invested work is the same as proprietary
output. Then (6.4c) applied to human capital could show as
human growth = invested consumption + positive self-invested work — human depreciation, = invested consumption + self-invested work — recovered human depreciation,
confirming (5.2) and (5.3a).
Logic also seems to agree with Ben-Porath’s interpretation that self- invested work continues late into careers, and that it must stop when time for recovery runs out. But I would specify that invested consumption stops, for modeling purposes, at full-
time job entry or a little later to allow for initial job training.
This needn’t follow from my adjusted axioms. It’s just an impression from what | see. I don’t agree with Schultz that outlays on medicine or worker relocation are
investment. I see them as maintenance consumption preserving skills, not
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