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The Money Value of a Man

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  • Mark Huggett

    (Georgetown University)

  • Greg Kaplan

    (Princeton University)

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 find that (1) the value of human capital is far below the value implied by discounting earnings at the risk-free rate, (2) mean human capital returns exceed stock returns early in life and decline with age, (3) the stock component of the value of human capital is smaller than the bond component at all ages 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 Princeton University, Department of Economics, Center for Economic Policy Studies. in its series Working Papers with number 1474.

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Date of creation: Jul 2013
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Handle: RePEc:pri:cepsud:238kaplan

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Keywords: Value of Human Capital; Return on Human Capital; Idiosyncratic and Aggregate Risk; Incomplete Markets; Heterogeneous Agents;

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References

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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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