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The Risk-Return Trade-Off in Human Capital Investment

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  • Charlotte Christiansen
  • Juanna Schröter Joensen

    ()
    (Department of Economics, University of Aarhus, Denmark)

Abstract

In this paper we analyze investments in human capital assets in a way which is standard for financial assets, but not (yet) for human capital assets. We study mean-variance plots of human capital assets. We compare the properties of human capital returns using a performance measure and by sing tests for mean-variance spanning. A risk-return trade-off is revealed, hich is not only related to the length of education but also to the type of education. We identify a range of educations that are efficient in terms of investment goods, and a range of educations that are inefficient, and may be chosen for consumption purposes.

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File URL: ftp://ftp.econ.au.dk/afn/wp/06/wp06_02.pdf
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Bibliographic Info

Paper provided by School of Economics and Management, University of Aarhus in its series Economics Working Papers with number 2006-02.

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Length: 40
Date of creation: 01 Feb 2006
Date of revision:
Handle: RePEc:aah:aarhec:2006-02

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Web page: http://www.econ.au.dk/afn/

Related research

Keywords: Educational Choice; Efficient Frontier; Human Capital Investment; Mean-Variance Analysis;

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