Human Capital: Specialization - Comparison with the Roy Model (Lecture 17 of 19) University of Chicago | Spring 2010

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This the seventeenth lecture in the "Lectures on Human Capital" series by Gary Becker. This series of lectures recorded during the Spring of 2010 are from ECON 343 - Human Capital, a class taught every year by Gary Becker at the University of Chicago. In this class, Becker expounds upon the theory of Human Capital that he helped create and for which he won the Nobel Prize. Please see attached lecture notes, video annotations, and reading list for more information.


Professor Becker develops a model of job specialization and labor division. He stresses the importance of labor division because of the increasing returns to scale on this type of activity. He analyzes the problem of specialization using a model in which individuals are identical ex- ante and try to maximize the total output of the activities they perform.

Becker provides examples that show the great efficiency that result from division of labor and job specialization. Also, he stresses the wastes that society suffers when individuals have to perform labors in activities in which they are not experts as opposed to activities in which they are.

Professor Becker explains the differences between his model and the Roy Model commonly used in Labor Economics and explains how both models are helpful depending on the context. He illustrates what Adam Smith's quote about "the division of labor is limited by the extent of the Economy" means in the context of specialization. At the end, Becker argues that specialization or division of labor is clearly beneficial to modern economies as well.

Key concepts: specialization, division of labor, increases returns to scale on specialization, Roy Model.

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