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Opportunity Cost Of Educational Human Capital Investment. Application For The Position Of Beneficiary-Investor

Listed author(s):
  • Florea Voiculescu

    (“1 Decembrie 1918†University of Alba Iulia)

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    The present paper focuses on providing a model of applying the opportunitycost concept on investments in human educational capital. In the first part we haveshown that the real costs of educational capital investment does not involve direct andindirect educational costs only but also the opportunity costs, i.e. the earnings that arelost by choosing to invest in education (and not in something else). From our researchthere results the fact that the share of the opportunity cost within the total of theinvestment in educational capital is 60% that is a great share in rapport with other typesof investments. Further on, we have shown that the recovery of the investment isdetermined by two main factors: money and time. The first factor is the growth of revenuethat the skills acquired through higher education bring into relation with the situation"without education" and the second is the duration measured in years, in order that thequestion of revenue growth, investment are fully recovered and bring additional revenue(similar profit). The main conclusion of the present paper is that investment in educationhas a significant positive effect on the dynamics of the relationship between age andearnings, which weakens or even undoes the effect of the high level of opportunity cost ofthis type of investment. The argument for investment in human capital and education plus"non-market income" or "non-monetary effects" of education relates mainly to the rolethat education has on the quality of life. As a long term investment, education brings apermanent increased certainty of a better situation and it increases social developmentand social promotion.

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    Article provided by Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia in its journal Annales Universitatis Apulensis Series Oeconomica.

    Volume (Year): 2 (2009)
    Issue (Month): 11 ()
    Pages: 1-15

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    Handle: RePEc:alu:journl:v:2:y:2009:i:11:p:15
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