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Human Capital Accumulation and Life-cycle Earning

Author

Listed:
  • Bo Zhang

    (School of Economics, Peking University)

  • Zhixiang Zhang

    (China Economic and Management Academy, Central University of Finance and Economics)

Abstract

We investigate optimal time allocation between human capital accumulation and wage earning in dynamic settings. We present closed form solutions (modified MRAP) and find a remarkable difference between deterministic and stochastic exponential horizons. If death date is known, time during the early years is devoted to learning, then allocated between learning and working at a suitable constant ratio, then devoted solely to working until death; if death date is unknown, then, after an early-years period of pure learning, time is allocated between learning and working according to a suitable constant ratio forever.

Suggested Citation

  • Bo Zhang & Zhixiang Zhang, 2019. "Human Capital Accumulation and Life-cycle Earning," Annals of Economics and Finance, Society for AEF, vol. 20(2), pages 611-631, November.
    • Handle: RePEc:cuf:journl:y:2019:v:20:i:2:zhangzhang
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    References listed on IDEAS

    as
    1. Gary S. Becker, 1981. "A Treatise on the Family," NBER Books, National Bureau of Economic Research, Inc, number beck81-1, July.
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    3. Yoram Ben-Porath, 1967. "The Production of Human Capital and the Life Cycle of Earnings," Journal of Political Economy, University of Chicago Press, vol. 75(4), pages 352-352.
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    More about this item

    Keywords

    Human capital; Wage earning; Random life; MRAP; HJB equation;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
    • I20 - Health, Education, and Welfare - - Education - - - General

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