1. Productivity and Human Capital:
Why is Bill Gates so much richer than you are?

2. Human Capital
The sum total of skills embodied within an individual: education, intelligence, charisma, creativity, work experience, entrepreneurial vigor, even the ability to throw a baseball fast (Wheelan p.127)

3. Examples of Human Capital
Why is Bill Gates worth so much??

4. Examples of Human Capital
Steve Jobs: From Apple, to Pixar…to Apple??

5. How would you fair?
Greater demand for talent…vs…not so scarce talent…

6. Human capital as an economic passport
Which jobs would be needed virtually anywhere?
Doctor
Banker
Teacher

7. Human capital and poverty
Creative destruction??

8. Productivity
The efficiency with which we convert inputs into outputs. **how good are we at making things.** (Wheelan p. 135)

9. Productivity over time

10. Outsourcing…good or bad for productivity?
NAFTA
Manufacturing overseas
Can American workers compete with foreign workers who
make half as much? YES!!

11. Lump Labor Fallacy
For you to get a job, someone has to be fired!...Just kidding!

12. Future productivity
Are children better off than their parents or previous generations?
Parent’s time = more expensive…quality over quantity.

13. Types of income Absolute Income vs. Relative Income
“I want what’s he/she’s got” (purchasing power)
You = $110,000 vs. everyone = $200,000
You = $100,000 vs. everyone = $85,000
Relative makes
us happier

14. Questions What is human capital and how is it related to productivity?
Explain why outsourcing jobs puts lower skilled jobs at major competition while higher-skilled workers are better off.
Why are children from higher-skilled parents have a greater chance to have a higher human capital?