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future pay runs out. So do I. The puzzle is how pay could rise while human capital shrinks smoothly to zero. This would not be a puzzle if we were speaking of oil wells whose oil might continue to be pumped out at a steady or even rising rate until the well ran dry. We are puzzled because pay is generally believed to equal and compensate work. Work means the output of human capital. How could less capital steadily produce more output, meaning creation as distinct from depletion of value, particularly if some work is self-invested rather than marketed for pay? That would imply exponentially rising productivity, meaning rate of return, and rising to infinity at the end. Think about it. Strictly speaking, human capital is present value of future pay less spending on future childhood nurture plus textbooks or tuition or job training (collectively called “schooling” by Mincer) invested in human capital. Ben-Porath knew that, as had others before, but reasoned that investment in anything must stop when not enough time remains for recovery. | think so too. And I argue anyhow, from observation rather than logic, that invested nurture and schooling substantially end when we enter the full-time job market sometime in our twenties. Then human capital in adulthood is essentially present value of expected pay, or even less if Ben-Porath and I are wrong and nurture or schooling continues to the end. When only a year of pay is left ahead of us, human capital at most is time- discounted present value of one year’s pay. When one day is left, it is at most present value of one day’s pay. Yet age-wage profiles show pay (wage) holding level, or even rising, as human capital grades smoothly to zero. This is the famous age- wage puzzle. |’ll flesh out the same thought experiment later in what I call the parable of the boss and her secretary. Economists have recently proposed solutions which I see as farfetched. Possibilities that human capital indeed grows more productive with age, or depreciates all at once, seem implausible in each case and cannot begin to explain enough. | think Becker hinted at the answer in 1964. Becker pointed out that job training at the Chapter 2: Fast Forward 1/06/16 14 HOUSE_OVERSIGHT_010954