Task-Specific Human Capital

Abstract

Since Gary Becker’s (1964) seminal work, the theoretical and empirical literature on human capital has focused almost exclusively on general-purpose and firm-specific human capital. In this paper we discuss the implications of a third type of human capital, which we call task-specific, and which we believe is potentially as commonplace and as important as the two classic types. By task-specific human capital we mean that some of the human capital an individual acquires on the job is specific to the tasks being performed, as opposed to being specific to the firm. In other words, task-specific human capital is the simple but plausible idea that much of the human capital accumulated on the job is due to task-specific learning by doing. The idea of task-specific human capital is closely related to occupationand industryspecific human capital. In each case, human capital is specific to the nature of the work, not specific to the firm. Hence, when capital is accumulated, multiple firms value the capital, so most (or even all) of the value of the capital will be reflected in the worker’s wage. The main difference between the idea of task-specific human capital and occupationand industryspecific human capital is in how the idea is applied. We argue that task-specific human capital has much wider applicability than suggested (so far) by the occupationand industry-specific human-capital literatures; the specific issues we address are cohort effects, job design, and promotions. Another argument in the literature closely related to ours is the classic argument of Adam Smith (1776) in the Wealth of Nations concerning returns to specialization. Smith’s argument was that, due to learning-by-doing at the level of the task, productivity can be enhanced by having each job entail fewer tasks. We believe that Smith was correct in focusing on learningby-doing at the level of the task as an important idea for thinking about organizations. The goal of our paper is to describe some of the other implications of this idea for the design and operation of organizations.