WagesandHumanCapitalinPoland.docVIP

Sylwia Roszkowska Aleksandra Rogut Wages and Human Capital in Poland 1. Introduction The analyses of impact of skills on earnings were undertaken already by Adam Smith in his “Wealth of Nations” in 1776. He lists five “principal circumstances, which, so far as I have been able to observe, make up for a small pecuniary gain in some employments, and counter-balance a great one in others…” (Smith 1937, Book 1, Chapter X, pp.100-103). The second of these “circumstances” is the “easiness and cheapness, or the difficulty and expense of learning them.” Smith considers two categories of workers, “common labour” and “skilled labour”, where the latter includes “mechanics, artificers and manufacturers.” He explains that the skilled workers are required to go through an apprenticeship program, in contrast to common labour, which is “free and open to everybody” (see Chiswick, 2003, p. 3-4). In this discussion, Smith relates earnings to investment in education or training, at least some of which (apprenticeships) is undertaken in the workplace. Some of the time of the master and the apprentice, and perhaps other resources as well, are devoted to this training activity. Thus, Smith highlights what we would now call investment in on-the job training. The earliest analyses of human capital were those related to its impact on earnings. The starting point for the discussion was the concept of Francis Galton (half-cousin of Charles Darwin), English anthropologist and statistician, who lived in XIX century. He found out that the physical characteristics of human body are normally distributed among people, and concluded that it should be true also in case of human capital (see Galton, 1883). Taking into account the neoclassical assumption of mutual correlation between labour productivity and wages, he claimed that wages should also be normally distributed. But as he noticed in his research it is not the case we observe. In most of the cases the wage distribution is positively skewed (