Discrimination and Human Capital: A Challenge to Economic Theory & Social Justice

Richard K. Caputo
Wurzweiler School of Social Work - Belfer Hall
Yeshiva University
2495 Amsterdam Ave.
New York NY 10033-3299
212-960-0834
FAX: 212-960-9822
caputo@ymail.yu.edu
This paper reports findings of a study that uses the National Longitudinal Survey of Youth (NLSY79) data files to test the rational choice theory that discrimination discourages investments in human capital. Nearly 60% of the study sample (N=5585) reported job-hiring discrimination (race, nationality, sex, or age) between 1979 and 1982 and they were found to invest more in job training programs and additional schooling between 1983 and 1998 than those reporting no such discrimination. The logic and limits of supply-side neoclassical and classical utilitarian theories are introduced to explain this paradoxical finding and its implications, namely that discrimination leads to greater investments in human capital, theoretically "benefiting" society at large and, by inference, those discriminated against. Results of logistic and multivariate regression analyses, however, showed discrimination accounted for variation in job training and additional schooling beyond that of other factors, including race/ethnicity, sex, education level, self-esteem, years of employment. The relative contribution of race/ethnicity and sex varied by type of human capital investment, such that white males had the greatest advantage over black males and females in regard to job training and over black females in regard to additional schooling. Findings suggest that appeals to affirmative action policies and programs based on race and sex remain warranted. Social justice aims might be most effectively targeted to ensuring that black males have opportunities for and access to job training programs and that black women have opportunities for and access to educational institutions. Additional research is needed to adjudicate claims of rational choice and supply-side neoclassical theories regarding the effects of discrimination.