BUSINESS RESEARCH

Data Analysis & Research Methods

Data Analysis & Research Methods

In his book Wealth of Nations, Adam Smith files five principal situations, which, so far as I have been able to monitor, make up for a small pecuniary gain in some employments, and counter-balance a great one in others (Smith 1937, Book 1, Chapter X, pp. 100-103). The second of these circumstances is the easiness and cheapness, or the difficulty and expense of learning them.

In his discussion of this circumstance Smith first considers two categories of workers, common labour and skilled labour, where the latter includes mechanics, artificers and manufacturers. He then relates that the skilled workers are required to go through an apprenticeship program, in contrast to common labor, which is free and open to everybody. Moreover, the whole labour of the apprentice belongs to his master…Some money too is commonly given to the master for teaching him his trade…They who cannot give money give time…. A third category of labor is those in the ingenious arts and in the liberal professions, and, as is the situation today, their education is still more tedious and expensive 110 IV. Jacob Mincer and Human Capital: New Perspectives In this discussion, Smith relates earnings to investment in education or training, at least some of which (apprenticeships) is undertaken in the workplace. Some of the time of the master and the apprentice, and perhaps other resources as well, are devoted to this training activity. Thus, Smith highlights what we would now call investment in on-the-job training.

Over the next century and a half there was little work by economists on the issue of investment in skills or human capital.1 This is not to say there was no interest in labor earnings. In the United States there were numerous state labor surveys and studies that estimated wages by occupation and interest in immigration resulted in the 41 volume Dillingham Immigration Commission Report (1911) that, among other analyses, collected and analyzed data on the occupational attainment and earnings (wages) of immigrant and native born workers by country of birth and race/ethnicity, as well as a host of other characteristics. Analyses using the census were limited by the data collected. Although the U.S. Census of Population has asked for the respondent's occupation in every census since 1850, there was no question on earnings or income until the 1940 Census, and this was limited to the earnings of wage and salary workers. Income was asked in 1950, and only since 1960 has the census asked both earnings and income.

When interest in human capital resumed the focus was on the contribution of education to economic growth, investment in education in less developed countries and earnings differences across professional occupations (Milton Friedman and Simon Kuznets 1945, Theodore W. Schultz 1961, and the references therein). During this period, one of the important studies was the Milton Friedman and Simon Kuznets Income from Independent Professional Practice, published after a long delay in 1945 by the National Bureau of ...