Question

Analyze the extent to which you tend to concur with the following statements regarding the role of wage (W) rates :

D) the human capital (HK) training model suggests that one's earnings (W) reflect whether the type of training they receive is "specific" or "general."

Answer 1

Human capital training shows both positive and negative effects on wage rate. After a worker gets training, it may increase or decrease in wage rate. It depends on more than one particular factor. If a worker is working in same firm and receives a specific training on some particular field, then it may benefit him in getting higher wage if/when he is engaged in a role related to that training. This happens as the training is helping increase his productivity in the firm. In case he is applying in outside organisation, with specific training skills, that job role may or may not be related to his specific training skills. If the new role related to field where the worker has acquired specific training focussing on same field, it will increase his wage, as he will be more productive to the new company. There will be a higher than expected increase in wage. If the new role does not contain any field related to the specific training he recieved, then there will be either no change or negative change in wage of the worker.

In case of general training, worker gets trained in all work related areas. If he is working in same organization, it will not show any considerable increase in wage. However, if worker moves to another organization, and gets higher wage it reflects employers are sharing cost of and returns to general training. Worker will gain by job change in general training and will gain from remaining in same organization in case of specific training.