I’m curious – has anyone ever published an introductory-level explanation of human capital (including the decision to acquire it, i.e., education) in a manner analogous to the decision of firms to acquire physical (or intangible) capital goods? Please let me know.

It depends how much education. Certainly if 100% of children of parents in poverty or in low income families earned college degrees, then poverty in the next generation would absolutely plummet (and the country would be vastly wealthier and safer, and science, technology, and medicine would advance far faster.)

“But among those born between 1950 and 1965, who became an important part of the labor force beginning around 1980, college completion was pretty much flat, falling for males and increasing just slightly for females. This, say Goldin and Katz, is the key to the rise in earnings inequality that began at that time.

I think there’s something to this story, but I’m not sure it takes us very far in understanding the rise in U.S. earnings inequality or that it points us toward a solution.”

I’m very sure it points to a solution to a very large extent. How about this for starters — raising taxes on the wealthy enough to pay for universal preschool starting at age 3, and 100% government paid for bachelors degree tuition and reasonable room and board for a typical 4-year state university for everyone. This is NOT a cost. It’s a high return investment of the kind the pure free market will grossly underprovide due to well established in economics free market problems like externalities, asymmetric information, etc., etc.

A great thing about this solution is that when someone gets a college degree they increase their earnings by increasing the wealth they create — usually by substantially more than their increase in earnings — rather than by redistributing wealth.

I would also like to see a graph of entrepreneurship and education.

Now, i do agree that it does not play such a significant factor in income inequality in a direct way…but it is indirectly important to create a healthier, growing middle class. Better education provides people with the ability to think more for themselves and to have a better aim to better their lives and that of their family.

Side note: I think that part of the income inequality is due to NAFTA, the outsourcing of jobs and the influx of low skill labor into the US. The supply of workers is easily meeting the demand and there is no need for companies to raise wages. Part of the reason that jobs paid will during WW II was that there was a significant demand for wage workers and this, in turn, raised wages.