This book deals with many of the world's most critical issues. Its central subject is the development, maintenance, and employment of human resources. For years, politicians and writers have declared that, "Our people are our most important asset," without always seeming to understand what that expression meant. In modern times, however, sophisticated economic studies, as well as the experiences of individuals, enterprises, and nations, have confirmed the vital importance of human resource development. Indeed, it has been demonstrated that the returns to investments in human capital are higher than to any other investment. For individuals, personal welfare depends heavily on opportunities to develop one's knowledge and skills. Some of this development takes place in formal and informal learning systems, but most of it takes place on the job. Furthermore, work has become the way most adults identify themselves, organize their lives, and contribute to the human community.
As the active agents of production, human resources also determine the overall economic welfare of enterprises and nations. In the modern, internationalized information world, or what some call the "postindustrial" society, the maintenance and growth of relatively high incomes requires the development and use of advanced technology. This, in turn, requires workers with the knowledge and skills to develop and use that technology, to work with management to develop efficient production systems, and, as citizens, to help create the public institutions and policies required to make efficient and equitable use of physical and human resources. In these conditions, educated, motivated, trained, healthy people become an almost unlimited asset -- much more important than physical, capital, or natural resources. The opposite is also tree: uneducated, demoralized, or unhealthy people can inflict large social costs on any society.
In this sixth edition of Labor Econcmics, our basic objective is the same as it was in the first edition: to provide the reader with the factual and analytical tools to understand and make decisions about labor matters. We do not assume that all of the readers of this book will become professional labor economists -- though we hope some will decide to pursue this broad, dynamic, exciting, and important field. Rather, we have sought to equip our readers with the tools to make personal, business, and public policy decisions about labor issues. We also hope this book will provide a solid foundation for those who do choose to pursue more advanced studies in labor economics.
In order to achieve these objectives, we sought to provide the reader with an understanding of both the theory of labor markets and of labor market institutions. Theory is absolutely essential to understanding labor issues; theory enables the analyst