Heterogeneous Human Capital, Occupational Choice, and Male-Female Earnings Differences

Abstract

Human capital models have mainly focused on the rate of return to investment in a homogeneous stock of capital. Yet, individuals have different initial attributes that determine comparative advantage in producing different types of human capital. The authors find that mathematical ability is an important determinant of field choice for college students and that differences in earnings across fields are largely explained as a return to the use of scarce quantitative abilities in the production of each type of human capital. The model successfully accounts for the observed male-female differences in earnings and occupational choices of recent college graduates. Copyright 1990 by University of Chicago Press.