The effect of uncertain returns on human capital investment patterns
This paper formalizes a human capital model with a dynamic and uncertain rental rate of human capital. As a result, investment in human capital may no longer decline monotonically over time as is predicted by the standard Ben-Porath version of the human capital model. This model provides a plausible, theoretical explanation for the recent trend of investment in higher education later in the life cycle which is consistent with the empirically established, increasing returns to education. Copyright International Atlantic Economic Society 1998
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Volume (Year): 26 (1998)
Issue (Month): 4 (December)
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- Polachek, Solomon William, 1975. "Differences in Expected Post-school Investments as a Determinant of Market Wage Differentials," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 16(2), pages 451-70, June.
- Altonji, Joseph G, 1993.
"The Demand for and Return to Education When Education Outcomes Are Uncertain,"
Journal of Labor Economics,
University of Chicago Press, vol. 11(1), pages 48-83, January.
- Joseph G. Altonji, 1991. "The Demand for and Return to Education When Education Outcomes are Uncertain," NBER Working Papers 3714, National Bureau of Economic Research, Inc.
- Light, Audrey, 1995. "Hazard model estimates of the decision to reenroll in school," Labour Economics, Elsevier, vol. 2(4), pages 381-406, December.
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