Chapter 24 Human Capital and Artists' Labour Markets

Abstract

It is argued that human capital theory applies only weakly to artists' decisions about investment in schooling and training and about occupational choice. However, the same can be said about the sorting model. What is lacking in cultural economics is an understanding of talent and creativity, what economic factors motivate artists and how creativity can be encouraged as part of government cultural policy. Bringing social and cultural capital into the equation do not seem to add much in the way of understanding artists' labour markets. A novel argument is made that the reproducibility of works of art in combination with copyright law alters the established view that human capital cannot be separated from labour, in this case that of the artist.

Introduction

The role of human capital in labour economics has a long history, going back to Adam Smith. Smith recognised the effect of both training and talent in determining wages, the latter in his famous comment on the ‘exorbitant’ rewards of opera singers and dancers.¹ The influence of innate ability and knowledge acquisition on earnings has been much discussed in human capital theory and this discussion is particularly relevant to artists. The study of artists' labour markets is important in cultural economics because we need to understand what factors affect the supply of work by creative artists and performers since cultural policy, whatever its explicit aims, is ultimately designed to encourage creativity.

In this chapter, two basic questions are addressed: what contribution does human capital theory make to understanding creativity in the arts and culture and what contribution does cultural economics make to our understanding of human capital? Much of the analysis of human capital over the last 30 years has been about the econometric problems of identifying the specific contribution to earnings of innate ability rather than of ability acquired through ‘schooling’. Because the role of innate ability or talent is far greater in the arts than it is in non-arts occupations, its influence is an area in which cultural economics can make a contribution to human capital theory. It also seems likely that on-the-job training and experience are more important in the arts than in other occupations. Another distinguishing feature of artists' supply behaviour is their concern with utility and reputation, which considerably modifies their desire for financial reward. Furthermore, the arts and cultural industries are areas in which there is dependence on copyright law for protecting artists' earnings, enabling them to obtain future as well as present income. There is, therefore, reason to believe that artists' labour markets differ from those of other workers and this raises the question whether human capital theory applies in them. However, while there has been a great deal of empirical work on the role of human capital in ‘ordinary’ labour markets, there have been relatively few econometric studies of artists' labour markets.

This chapter is organised as follows: an introduction to human capital theory precedes a brief summary of issues in the measurement of human capital using earnings functions, including those relating to artists. Then the role of talent and creativity in artists' labour markets is discussed, with particular reference to the superstar phenomenon. That is followed by a section on artists' training and occupational choice, after which we consider the analogy between human capital, social capital and cultural capital. We then turn to the relation in artists' labour markets between human capital, the ability to reproduce artists' work and copyright law, showing how that alters the ‘inalienability’ problem in human capital.