The Risk-Return Trade-Off in Human Capital Investment

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The Risk-Return Trade-Off in Human Capital Investment

Author Info

Charlotte Christiansen () (Aarhus School of Business)
Juanna Schröter Joensen () (University of Aarhus)
Helena Skyt Nielsen () (University of Aarhus and IZA Bonn)

Additional information is available for the following registered author(s):

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 using tests for mean-variance spanning. A risk-return trade-off is revealed, which 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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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1962.

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Length: 41 pages
Date of creation: Feb 2006
Date of revision:
Handle: RePEc:iza:izadps:dp1962

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Article
- Christiansen, Charlotte & Joensen, Juanna Schroter & Nielsen, Helena Skyt, 2007. "The risk-return trade-off in human capital investment," Labour Economics, Elsevier, vol. 14(6), pages 971-986, December. [Downloadable!] (restricted)
Paper
- Charlotte Christiansen & Juanna Schröter Joensen, 2006. "The Risk-Return Trade-Off in Human Capital Investment," Economics Working Papers 2006-02, School of Economics and Management, University of Aarhus. [Downloadable!]

Find related papers by JEL classification:
I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

This paper has been announced in the following NEP Reports:

NEP-ALL-2006-02-12 (All new papers)
NEP-EDU-2006-02-12 (Education)
NEP-HRM-2006-02-12 (Human Capital & Human Resource Management)

References listed on IDEAS
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

Angel de la Fuente & Juan Francisco Jimeno, 2004. "The private and fiscal returns to schooling and the effect of public policies on private incentives to invest in education: a general framework and some results for the EU," UFAE and IAE Working Papers 635.04, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC). [Downloadable!]
Other versions:
- Angel De la Fuente & Juan F. Jimeno, 2005. "The Private and Fiscal Returns to Schooling and the Effect of Public Policies on Private Incentives to Invest in Education: A General Framework and Some Results for the EU," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
- Angel de la Fuente & Juan Francisco Jimeno, 2008. "The private and fiscal returns to schooling and the effect of public policies on private incentives to invest in education: a general framework and some results for the EU," UFAE and IAE Working Papers 737.08, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC). [Downloadable!]
- Ángel de la Fuente & Juan F. Jimeno, 2005. "The private and fiscal returns to schooling and the effect of public policies on private incentives to invest in education: a general framework and some results for the EU," Banco de EspaÃ±a Working Papers 0509, Banco de España. [Downloadable!]
Peter Schneider & Dieter Sadowski, 2008. "The impact of New Public Management (NPM) instruments on PhD education," Discussion Papers 200803, Institute of Labour Law and Industrial Relations in the European Community (IAAEG). [Downloadable!]
Kristin Kleinjans, 2008. "Do Gender Differences in Preferences for Competition Matter for Occupational Expectations?," Economics Working Papers 2008-09, School of Economics and Management, University of Aarhus. [Downloadable!]
Paolo Buonanno & Dario Pozzoli, 2007. "Risk Aversion and College Subject," Working Papers 0707, University of Bergamo, Department of Economics. [Downloadable!]
Annette Alstadsæter, 2009. "Measuring the Consumption Value of Higher Education," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
Other versions:
- Annette AlstadsÃ¦ter, 2004. "Measuring the consumption value of higher education," Econometric Society 2004 Australasian Meetings 40, Econometric Society. [Downloadable!]

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