Claire feels like she is not contributing to the family because she doesn’t have a job. She has applied to 5 jobs recently, but despite her college degree, she is rejected from all of them. Because she has been out of the labor force for so many years, her human capital has depreciated. The second important component of this scene is to consider the non-pecuniary benefits of work. Not all workers are income maximizers as some have other motivations for working in paid employment.
See more: college, education, human capital, human capital investments, human capital depreciation, job search, labor force, labor force participation, labor market, nonpecuniary benefits, skills, unemployment
It is career day at Luke’s school, and the teacher asks Claire to speak about her job as a stay at home mom. She points out that she actually has a lot of different jobs as a stay-at-home-mom. The household production model assumes that agents decide between working at paid work or working at home and producing things that they could have bought with income. Both yield some level of utility, but some partners will specialize in household production depending on the relative wages of the other partner.
One of the downsides of specializing in household labor is that people lose specific and general human capital associated with market work. While Claire would like to go back to work, it is hard to find a job after you have been out of the labor force for 15 years, mainly because everyone who didn’t drop out would have continued learning new skills. In labor economics, this is known as The Mommy Track.
See more: household labor supply, household production, human capital depreciation, job search, labor force, labor force participation, labor market, skills, tradeoffs, unemployment
One of the tougher topics to get across to students is why older Americans start to leave the labor force. One explanation for the leave is that they see a decrease in their human capital and that some of their previous training is no longer relevant. This clip does a good job bringing humor to a topic that often sounds derogatory.
See more: human capital depreciation, innovation, labor, life cycle considerations, technological change, technological knowledge