Human Capital Theory and Gender Inequality in the Labour Market - Literature review Example

Running Header: Human Capital Theory and Gender Inequality in the Labour Market Customer Inserts His/Her Name Customer Inserts Grade Course Customer Inserts Tutor’s Name 25, 02, 2011 Introduction Human Capital in relations to labour market is essentially an open field where workers with different skills and educational qualifications are selected by employers to different vacancies according to their specializations. In essence, the labour market operates in a manner that is not discriminatory hence rewarding employees as per their productivity. Other definitions of human capital theory can be explained as studies of individuals, nations or organizations which essentially accumulates both the technical skills and productivity skills by consideration of investments. It can thus be concluded that human capital theory represents a defined path for an individual to enhance his or her personal appeal in the labour market. Human capital theory is fundamentally a theoretical framework that analyses competence development, education and job experience which are considered as imperative aspects for an individual employability. As a result of investment in these aspects, an individual will enhance his or her chances of employability in an event of a vacancy emergence in a different sector of the economy which aligns with his or her skills. This theory also supports the growth of an individual with skills which are necessary and required by the labour market. Personal development is the key aspect in professional growth in the labour market. An individual with high qualifications, experience, skills, and educational coupled with effort is likely to develop to a higher and well paying jobs in the labour market. This analysis focuses on the human capital theory with an aim of providing a plausible explanation of gender inequality in the labour market. It accomplishes this by giving an account of women and men positions in the labour market and why there is a less development of women in the labour market as compared to men in the same labour market. Gender inequality is thus explained with much focus on the rationale behind women’s reluctance in the labour market. Gender inequality in the labour market According to Reeves (2010, p, 25) human capital theory specifies investment in education, professional qualification, work experience and training as essential components in climbing the ladder in the labour market. In essence, investment choices are the essential factors in increasing the human capital position. One’s commitment to increase the skills and work experience through training will also contribute to improved marketability of an individual in the labour market since the labour market presents a neutral arena for investment choices to prevail (O'Hara, 2001). The evolution of human capital theory has both been challenged and supported by different scholars with different perspectives of the concept and its relevance in the market labour. These different perspectives help in shading more light on the viability of the human capital market theory. As stated by Herts-Lazarovits (2006, p.72) women generally prefer marriage, and household chores like raising children as compared to working or progressing their careers. Despite the fact that this form of division of labour is essential for men and women, it often disadvantages women because it causes income inequality even if women have the same talent and educational background like men. The responsibilities of women in terms of childcare and household work are intensive and hence leading to lower hourly input as compared to men in the same market of human capital. According to Hadjar and Becker (2009, p.30) men are more successful in the human capital market because of their efforts, it is noted that women with the same skills, education and talent as men are less successful in the labour market because they put less effort. As explained by Reeves (2010, p, 26) women with children are likely not to work or work few hours as compared with women without children. On the other hand men with children are more likely to put more effort in their work as compared to met without children in terms of number of working hours. It is also noted that some institutional factors largely contribute to women’s deficiency in the human capital. Women are highly unlikely to be awarded job training as compared to men and they also have less if any development opportunities (Browne,1999). This contributes to their unlikelihood of being selected to managerial positions which further pushes them down the capital market ladder. In most organizations women are usually employed in supportive functions like human resource, marketing and accounting and not in position of responsibility for the positions of responsibility like the profit and loss unit of a business. According to Reeves (2010, p.26) in the year 2007, in Fortune 500 firms , only about 27 % of women held positions of profit and loss responsibility and about 73 % of women held other staff positions exclusive of any profit and loss accountability . This can further explain the reason why women have not made it in the capital market since the profit and loss positions are the major gateways to promotions and other forms of career development (Da Silva, 2007). Statistics have shown that in the recent times, an estimated 50 % of women in the globe are in the labour market, also about 1/3rd of the workers around the globe are also women. Because of traditions, most female jobs are not as well paying as the men in the same industry because men’s performance in the labour market is more valued as compared to the women work. In particular, women’s average income is about 2/3rd that of men’s. Globally about 1/5th of the wages in the world accrue to women mostly because they are usually engaged in jobs that are low paying. The traditional factors that make women less active as human capital in the labour market can be credited to traditions that undermine them and also racial segregation that locks them out of the labour market. In Israel for instance, Palestinian women have improved in terms of their educational background as compared to the 70s and 60s when gender segregation was more pronounced (Blanchard, 2001, p. 190). In some areas women have even overtaken men; unfortunately this has not turned out to increased women human capital because of the segregation that tends to support men in high skilled jobs and hence locking women out (Braham, 2002). The other factors that contribute to gender inequality in the labour market is race, ethnicity, low regard to training, education and even job training and low solidarism. These factors tend to affect women more as compared to men in the labour market. Women are generally less ambitious when it comes to career development and progress as compared to their male counterparts (Chafetz, 2006). In developing countries, there is a stronger argument regarding lacking human capital because women in these countries receive less formal education as compared to men. In developed countries, human capital cannot adequately explain the rationale behind lack of women in human capital in the labour market because their educational qualifications are almost balanced. In the U.S. and Europe women have similar qualifications with men which make them eligible for challenging tasks. According to Reeves (2010, p, 27), in the U.S. 58 % of women have undergraduate degrees, 59 % have masters and 47 % have doctorates. As evident from this analysis, human capital theory is important in explaining the gender inequality and gender segregation in the labour market. On the contrary, empirical facts have failed to fully appreciate human capital theory explanation of the market behaviour and the variation of gender roles (Acemoglu, 2002, p.71). A good example of this is the increased educational level for Palestinian women which have not translated to increased job opportunities like men. In the U.S. the level of education is almost equal but the some scholars argue that women put more effort than men in the labour market. In summary, human capital explains fundamental possible reasons for labour market inequality but does not give plausible explanations for this happening since empirical facts proves that there are other market factors that contribute to the gender inequality in the labour market (Reeves, 2010, p.27). Learning and Tutor’s feedback Learning and tutor’s feedback in assignment 1 has provided good foundation for proper argument on the issue of human capital market. The approach taken in this assignment is therefore more focused with examples and reference justification of the facts argued. This essay is therefore discussed in a more academic approach as a result of the helpful feedback from the tutor. Conclusion As discussed in this paper, human capital market is mainly described as the cumulative skills gained through training and educational qualification that enhances an individual marketability in the job market. Human capital market considers the labour market as a levelled arena where employers only employee and promote individuals with skills and talents coupled with their efforts. It has however been noted by the human capital that development in terms of gender is uneven owing to a number of factors. Some of these factors are inadequate education, skills, talent and effort among women as compared to men. Women are also not placed in positions of decision making as evident from Fortune 500 where only 27 % of women are in these positions. Human Capital theory does not however plausibly explain the gender inequality issues in the labour market because of other factors in the market that the theory overlooks. Some scholars argue using empirical facts that equality in terms of education, skills and talent does not directly translate into promotion or even employment in the labour market. Word Count of essay plus references is 1693 Word Count for learning is 64 References Acemoglu, D. (2002). ‘Technical Change, Inequality, and the Labour Market’, Journal of Economic Literature, 40(1), pp. 7-72. Blanchard, O and Portugal, P. (2001). What hides behind an unemployment rate: Comparing Portugese and U.S. unemployment, American Economic Review, 91(1), pp.187-207. Braham, P. And L. Janes (eds.) (2002). Social Differences and Divisions. The Open University & Blackwell, Oxford. Browne, I (1999). Latinas and African American women at work: race, gender, and economic inequality, Russell Sage Foundation, Carlifornia. Chafetz, J (2006). Handbook of the sociology of gender, Springer, Arlington TX. Da Silva, C (2007). The opportunity gap: achievement and inequality in education, Harvard Educational Review, Los Angeles. Hadjar, A and Becker R (2009). Expected and unexpected consequences of the educational expansion in Europe and the US: theoretical approaches and empirical findings in comparative perspective, Haupt Verlag AG, New York. PP. 24-45. Herts-Lazarovits, R.O. (2006).  Women Principals in a Multicultural Society: New Insights Into Feminist Educational Leadership, Sense Publishers, New York. PP. 71-75. O'Hara, P (2001). Encyclopedia of political economy, Routledge, New York. PP.12-23. Reeves, M.E (2010). Women in Business: Theory, Case Studies, and Legal Challenges, Taylor & Francis, London. PP. 23-35. Read More