ABSTRACT
Human capital theory is the traditional approach used in economics to explain both women's lower wages relative to men and their concentration in low-status jobs. This theory parallels the neoclassical theory of wages by arguing that wages are linked to productivity. However, unlike orthodox neoclassicism, human capital theory argues that wages are not determined by current productivity alone, but also by the cash returns to workers who have invested in increasing their work-related skills. "Human capital" refers to the knowledge workers acquire through the investment of time and money to become more productive. Like "ability," it can rarely be measured directly. However, human capital theorists argue that years of education and years of experience improve workers' capacities, and that employers reward employees for attaining such skills.
