Will Uber-fication of the Job Market Increase or Decrease Human Capital Formation?

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Tyler Cowen has an interesting post on the sharing economy and job training:

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This could be true. But I could tell another (somewhat overlapping) story:

1. Currently there is a multi-party relationship between individuals, universities, and employers. Individuals attend universities where they partake in some human capital formation and some filtering and signalling activities. Employers then hire individuals and provide additional training.

2. With on-demand hiring, these relationships will change. As Tyler points out, employers may provide less training to employees.

3. This could lead to less training overall. Or it could shift the onus of training mostly to the individual, as Tyler suggests.

4. However, it could also put pressure on universities to pick up a greater burden of the training load. One could imagine that this leads universities to place greater emphasis on vocational (trade specific) training, as well as more general skill formation (non-trade specific, such as data analysis, project management, people management, etc.). Additional, an individual’s relationship to a university might move from one four year stint to a longer ten to fifteen year on again / off again relationship.

5. Alternatively, if universities don’t adapt (especially mid to lower tier schools), it could create room in the market for new types of training institutions that are more skill based (such as coding academies). These institutions might be tightly aligned with certain on-demand platforms, so that people who want to compete in these on-demand markets can get the necessary skills. Similarly, individuals might form longer term relationships with these institutions.

6. If either universities or new institutions end up picking up more of the burden, there is a world where we move towards more efficient labor relationships, as we will have put real pressure on the weakest part of the training link: universities.

Will the sharing economy decrease human capital formation?

I’m not sure.

I can see a world where it makes our training institutions much better.

But I can also poke holes in my story (employer training is mandatory and thus very different; universities won’t respond; moving from employer to university training is moving from high to low efficiency, etc.), so I’m definitely not arguing that it is right. Just that some version of it might be right.

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