This book is a welcome addition to the small but growing literature on the history of economic thought in labor economics. Teixeira's subject is Jacob Mincer, a highly respected and influential contributor to the development of what is now commonly called modern (or mainstream) labor economics. Well written and researched, the volume received the first “IZA Prize in Labor Economics.”
Perhaps deserving first comment is that the book is really a “three-for-one.” As suggested by the book's title, the central subject is the life and contributions of Mincer. But around this topic are woven two other subjects of significance. The first is a more broad-based overview of the evolution of thought in labor economics during the first two-thirds of the twentieth century; the second is a review and assessment of the major research area that Mincer contributed to—human capital theory.
One part of the volume is a relatively straight-forward biography of Mincer. Born in Poland in 1922, Mincer survived three years in a German concentration camp during World War II and then emigrated to the United States. Mincer did graduate work at Chicago but obtained his Ph.D. degree at Columbia. Teixeira relates that Mincer was strongly influenced by George Stigler, then at Columbia, and imbibed Stigler's passion for using neoclassical price theory as the basis for theoretical and empirical research. At Stigler's suggestion, Mincer left Columbia for two years of post-graduate work at Chicago. Here he met two other people who were to greatly influence his life and research: Greg Lewis and Gary Becker.
Mincer moved back to New York City and took a faculty position at Columbia in 1960, where he stayed for the rest of his career (retiring as emeritus in 1991). Becker had preceded Mincer by two years in coming to Columbia and the two quickly formed a close and productive partnership. Together, they created a “second Chicago” in labor economics at Columbia, centered around a doctoral workshop in labor economics. Both men also became very active in the National Bureau of Economic Research (NBER, then headquartered in Manhattan) and used the NBER as a launch pad for their rapidly growing research program and support base for their likewise rapidly growing cadre of graduate students.
It was during the 1960s and 1970s that Mincer published his most influential and path-breaking research. The core of Mincer's research program was on the role of human capital investment as a determinant of individual earnings and the overall distribution of income. Mincer conceptualized human capital as coming principally from two sources: formal years of education and training received on-the-job. In his most influential book, Schooling, Experience and Earnings (1974), Mincer used the theory of human capital investment to derive one of the most oft-used empirical devices in all of labor economics—the human capital earnings function. This function expresses the relationship between individual earnings (the dependent variable) and the person's education, work experience, and other demographic and market factors (the independent variables). The number of subsequent studies using the human capital earnings function is literally in the thousands.
Another significant contribution Mincer made to the development of labor economics was in his role as teacher and mentor. Mincer and Becker attracted a large group of very able doctoral students to Columbia who went on to become highly influential and productive “next-generation” practitioners of the Chicago/Columbia price theory approach to labor economics. Examples include Barry Chiswick, Reuben Gronau, Robert Michael, June O'Neill, Soloman Polachek, and George Borjas.
Admirably, Teixeira endeavors to place Mincer's research program and contributions in a larger historical and intellectual context. As indicated above, one dimension of this larger context is an extended review of the history of thought in labor economics during the 1920–1970 period. When Mincer did his doctoral studies in the 1950s, the “old” or “traditional” approach to the subject was dominant, based on a neo-institutional and industrial relations paradigm. In this guise, labor economics was relatively hostile to neoclassical price theory, had a relatively undeveloped theoretical base, viewed labor markets as highly imperfect and dominated by institutional forces, focused a good deal of attention on unions and the process of collective bargaining, took a historical/institutional/multi-disciplinary approach to labor issues, and was typically sympathetic to various regulations of the labor market.
Mincer, along with allies from Chicago, mounted a sustained and highly successful attack on the old labor economics. Convinced of the analytic power of price theory and the competitive nature of real world markets, these economists set out to re-integrate labor economics with the theoretical core of the mother discipline, meaning the competitive model of demand and supply, supplemented with new theoretical extensions such as human capital. Accompanying this approach was emphasis on methodological individualism, “economic imperialism” (application of price theory to any and all social science fields and forms of human behavior), and policy implications in favor of free markets. As Teixeira describes, by the 1970s the Chicago/Columbia approach was triumphant and labor economics entered its “modern” stage.
The third part of the book is devoted to an in-depth review of the research literature and findings related to Mincer's research program. This material spans all or parts of five chapters. The central focus is on human capital, but with forays into other areas such as labor supply, occupational choice, and economics of the family. In Chapter 2, for example, Teixeira reviews economists’ initial investigations into the economics of education, such as by Theodore Schultz of Chicago, and how this line of research later blossomed into human capital theory by Mincer, Becker, and others. Teixeira continues the story in Chapter 3 where he gives an in-depth review of the theoretical and empirical work on the relationship between human capital and earnings, including Mincer's path- breaking development of the human capital earnings function and his studies of human capital and the distribution of earnings. Chapter 4 is devoted to “Appraising the Impact of the Human Capital Research Program,” Chapter 5 covers “Human Capital and the Long-Term View of the Labor Market,” and Chapter 6 considers “Human Capital and Labor Market Dynamics.”
Mincer died shortly before this volume was published, so he regrettably did not get to see the final product. I am certain he would have been most pleased and proud of it, and also grateful to Teixeira for what is obviously a labor of love and respect. For the rest of us, Teixeira has produced a fine volume that adds significant new material on the history of thought and research in labor economics.
