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The Money Value of a Man

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  • Mark Huggett

    ()
    (Department of Economics, Georgetown University)

  • Greg Kaplan

    ()
    (Department of Economics, University of Pennsylvania)

Abstract

This paper posits a notion of the value of an individual’s human capital and the associated return on human capital. These concepts are examined using U.S. data on male earnings and financial asset returns. We decompose the value of human capital into a bond, a stock and a residual value component. We find that (1) the bond component of human capital is larger than the stock component at all ages, (2) the value of human capital is far below the value implied by discounting earnings at the risk-free rate, (3) mean human capital returns exceed stock returns early in life and decline with age and (4) human capital returns and stock returns have a small positive correlation over the working lifetime.

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Bibliographic Info

Paper provided by Penn Institute for Economic Research, Department of Economics, University of Pennsylvania in its series PIER Working Paper Archive with number 12-014.

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Length: 55 pages
Date of creation: 03 Apr 2012
Date of revision:
Handle: RePEc:pen:papers:12-014

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Keywords: Value of Human Capital; Return on Human Capital; Asset Pricing; Idiosyncratic and Aggregate Risk;

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References

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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. The value of human capital
    by Economic Logician in Economic Logic on 2012-06-01 14:10:00
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Cited by:
  1. Benzoni, Luca & Chyruk, Olena, 2013. "Human Capital and Long-Run Labor Income Risk," Working Paper Series, Federal Reserve Bank of Chicago WP-2013-16, Federal Reserve Bank of Chicago.

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