Where Are We Now With Human Capital Theory in Australia

In the economics school the dominant paradigm for the study of wage determination is the human capital model.Increasingly, however, there is growing discontentment with this model.The catalyst is the empirical literature demonstrating important earnings relationships which cannot be adequately explained by competitive wage theory.ls human capital theory redundant?How useful is the model in the 1990s?This paper provides an assessment of the current empirical status of human capital theory in Australia.The analysis demonstrates that even in a non-competitive environment such as Australia the human capital framework is an extremely useful model for the contemporary study of wage determination.Its weakness is its inability to explain significant and persistent inter-industry, inter-occupation and gender wage differences.