In the month in which the world marks International Workers’ Day, returning to Gary Becker’s thinking is to revisit how we value labour. In Mozambique, where structural problems persist, this reflection becomes particularly urgent.
When Gary Becker published Human Capital in 1964, he was not merely introducing a technical concept. He was proposing a paradigm shift. For this economist, education, training and health were more than social rights or public expenditures. They were investments with measurable returns. Becker, awarded the Nobel Prize in 1992, expanded the reach of economics into areas previously considered “non-economic”, such as the family, crime and discrimination. His approach rested on a simple but powerful premise: individuals make rational decisions based on costs and benefits, even in complex social contexts.
At the centre of this vision lies the idea of human capital — the set of skills, knowledge and attributes that increase a worker’s productivity and, consequently, their income.
From Human Capital to Wages
The theory of human capital is based on an almost intuitive reasoning: the more qualified a worker is, the higher their productivity and, under normal market conditions, the higher their wage. Gary Becker systematised this relationship by showing that investments in education and training generate returns over a lifetime, both for the individual and for the economy.
Just as a company invests in machinery, individuals invest in themselves, accumulating skills that, in theory, translate into better opportunities and future income. But this investment is far from neutral. It involves direct costs, such as tuition fees and materials, and indirect costs, such as time out of the labour market and delayed earnings. The decision to study or work thus becomes a cost-benefit equation, in which individuals project future gains against present sacrifices — one of the central features of Becker’s approach.
At this point, the analysis shifts from individual effort to market functioning. If human capital increases productivity, then, in Becker’s logic, wages should reflect that increase. Wage differences would largely be explained by differences in qualifications, experience and skills accumulated over time.
This perspective has profoundly shaped contemporary economics, influencing public policies, education systems and corporate strategies. Education came to be seen not only as a right but also as a strategic investment for economic growth and competitiveness. However, the transition from qualification to remuneration is far from automatic. The formulation itself raises critical questions: to what extent do wages actually reflect productivity? And what happens when the labour market is imperfect, segmented or unable to absorb available human capital? In such cases, the link between investing in oneself and reaping rewards can become weaker, or even illusory.
Networks of influence in access to employment, gender inequalities and institutional constraints distort the relationship between productivity and remuneration.
Mozambique Between Potential and Structural Deficit
In Mozambique, human capital theory finds both promising and unequal ground. Over the past two decades, some figures suggest an expansion in access to education: the net enrolment rate in primary education now exceeds 90%, and the number of secondary school students has more than doubled since the early 2000s, according to the Ministry of Education and Culture and World Bank reports.
Still, only a fraction (estimated below 20%) completes secondary education, revealing an educational bottleneck that limits the effective accumulation of human capital.
The mismatch becomes more evident when education is compared with the labour market. According to estimates by the International Labour Organization (ILO), around 80% of Mozambique’s workforce is in the informal sector. Among urban youth, even those with secondary or higher education, unemployment and underemployment remain high, often above 20% in some national surveys. In other words, investment in education is not matched by a labour market capable of absorbing and rewarding this capital.
This misalignment is a recurring theme in public debates, economic forums and national strategic documents, which point to an economy that is still poorly diversified and heavily dependent on low-technology sectors. The direct consequence is limited demand for advanced skills, weakening the link between qualification and wages — precisely the central link in Becker’s theory.
To these structural weaknesses are added less quantifiable but equally important factors: networks of influence in job access, persistent gender inequalities (with higher school dropout rates among girls in rural areas), and institutional limitations that distort the relationship between productivity and pay. As a result, although the country accumulates human capital in formal terms, its transformation into income and social mobility remains constrained.
The Limits of Becker’s Theory
Despite its influence, human capital theory is not without criticism. Some economists argue that Gary Becker underestimates the role of social and institutional structures in determining wages. Labour market segmentation theory, for example, suggests the existence of “parallel markets” with different rules, limiting mobility and distorting the relationship between qualification and income.
Other critics point out that Becker’s approach tends to place excessive responsibility on individuals, ignoring systemic barriers such as poverty, discrimination or state failures.
In the African context, and particularly in Mozambique, these criticisms carry significant weight. The mere accumulation of human capital does not, by itself, guarantee better living conditions if the economic fabric is unable to absorb and value that potential.
From Theory to Reality: Which Path Forward?
Revisiting Gary Becker during Workers’ Month is also an invitation to reflect on the future of work in Mozambique. Human capital theory remains relevant, but it requires adaptation to local realities. Investing in education is necessary, but not sufficient. It is essential to align training with labour market needs, promote industrialisation, strengthen institutions and create conditions for merit and productivity to be effectively rewarded.
Rather than rejecting Becker, the challenge lies in complementing him — integrating his vision with a broader analysis of the social and economic dynamics that shape the labour market. In a young and transforming country, true human capital is still under construction. And its value will depend both on individual investment and on the collective ability to transform knowledge into opportunity.
Text: Celso Chambisso
