Human capital in the twenty first century

Abstract

This paper reviews Thomas Piketty's treatment of human capital in Capital in the Twenty First Century. It first explores Piketty's reasons for excluding human capital from the analysis, and determines that the fact that human capital is not sold on a market is not a sufficient argument for exclusion. The "fundamental laws of capitalism" do not rely on the assumption that capital is exchanged on a market. The paper further argues that Goldin and Katz's (2008) work on education and income inequality is more compatible with Capital in the Twenty First Century than many critics suggest. The paper concludes by arguing that including human capital in the broader discussion of inequality should not detract from Piketty's broader findings.