Human Capital, and Intergenerational Mobility - Overlapping Generations Model
By Gary Becker - University of Chicago
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453
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Lecture Description
"This the seventh 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.
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Professor Becker introduces an extension of the model that allows for two overlapping generations. In this model, parents choose their consumption of goods in two periods, their choice of human capital investment for their children, their choice of investment in physical capital, and the bequest that they give to their children when their reach adulthood.
As in previous lectures, Becker uses a rational choice model with the aforementioned choice variables. However, in this case the parents have two budget constraints: one for each of the overlapping periods. He explains the connection between the choice variables in each of the overlapping periods and describes technically and intuitively the characteristics of the model. The income of the kids when they become adults, in this case, is determined by the human capital investment made in them and by the bequest that parents give them when they become adults.
The consequences for intergenerational income mobility caused by the bequest left by parents do not appear in class but they are discussed in the suggested references.
Finally, Professor Becker develops the preference transmission model that is discussed in his Nobel Prize Lecture. This model is an extension to the previous model in which parents are able to invest in ""guilt (preference) transmission"" so that children will be guilted into supporting their parents when they are older.
Key concepts: bequest, consumption goods, degree of altruism, parental income, lifecycle discount factor, preference transmission, guilt."
Course Description
"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.
In total, there are 19 lectures. Each lecture includes a short description of topics covered as well as topical keywords. The interested viewer is also provided with references to books and journal articles from Gary Becker's own original research that bear on the topics discussed in each lecture. Additionally, the viewer is also referred to the appropriate section of a freely available and informal set of student notes. These lecture notes are provided as-is and the author, Salvador Navarro Lozano cannot accept responsibility for any typos or errors. Much of the lecture material already appears in one of Gary Becker's academic books and those remain the best source of information in case of any doubts.
Over the years, thousands of graduate students in Economics, Sociology, Public Policy, and other fields have benefited from the teachings of Gary Becker in his Human Capital class. We hope that by providing these lecture videos and notes that people around the world can increase their own human capital and enjoy studying this fascinating subject of human capital as taught by Gary Becker.
Filmed by: Joey Brown
Lecture Summaries: Jorge L. Garcia
Lecture Notes: Salvador Navarro Lozano
Supported by: The Becker Center at the Booth School of Business at the University of Chicago"
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