This chapter, titled "Investment in Human Capital: A Theoretical Analysis," by Gary S. Becker, explores the economic implications of investing in human capital. The author argues that activities that affect future well-being, such as education and training, are crucial for understanding economic phenomena. The chapter discusses various forms of human capital investment, including schooling, on-the-job training, medical care, and information acquisition, and their impact on earnings and consumption. Becker emphasizes that the typical investor in human capital is more impetuous and prone to errors compared to investors in tangible capital. He presents a theoretical framework to analyze the effects of on-the-job training, which is illustrated through detailed equations and economic models. The analysis shows that on-the-job training can increase future productivity and affect wages and employment over time. The chapter also differentiates between general and specific training. General training, which benefits multiple firms, increases the marginal productivity of workers in all firms, leading to higher wages. Specific training, on the other hand, increases productivity only in the firm providing the training, and the wage paid to trained workers is higher than what they could receive elsewhere. The analysis further explores the implications of training on labor turnover, demand changes, and economic cycles, concluding that workers with specific training are less likely to be laid off during economic downturns. Overall, the chapter provides a comprehensive theoretical analysis of human capital investment, highlighting its economic significance and the complex dynamics it influences.This chapter, titled "Investment in Human Capital: A Theoretical Analysis," by Gary S. Becker, explores the economic implications of investing in human capital. The author argues that activities that affect future well-being, such as education and training, are crucial for understanding economic phenomena. The chapter discusses various forms of human capital investment, including schooling, on-the-job training, medical care, and information acquisition, and their impact on earnings and consumption. Becker emphasizes that the typical investor in human capital is more impetuous and prone to errors compared to investors in tangible capital. He presents a theoretical framework to analyze the effects of on-the-job training, which is illustrated through detailed equations and economic models. The analysis shows that on-the-job training can increase future productivity and affect wages and employment over time. The chapter also differentiates between general and specific training. General training, which benefits multiple firms, increases the marginal productivity of workers in all firms, leading to higher wages. Specific training, on the other hand, increases productivity only in the firm providing the training, and the wage paid to trained workers is higher than what they could receive elsewhere. The analysis further explores the implications of training on labor turnover, demand changes, and economic cycles, concluding that workers with specific training are less likely to be laid off during economic downturns. Overall, the chapter provides a comprehensive theoretical analysis of human capital investment, highlighting its economic significance and the complex dynamics it influences.