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Human capital investment strategies in Europe

Author

Listed:
  • Pfeiffer, Friedhelm
  • Reuß, Karsten

Abstract

The paper analyses alternative investment policies and their consequences for the evolution of human capital in Europe based on a model of age dependent skill formation where the life span depends on investments during childhood. What makes the approach special is the analysis of the returns to education of alternative educational policies targeted at certain ages, countries, or productivity levels for two counterfactual policy regimes, one regime assuming the actual state of diversity and the other a unified Europe. Our results indicate that investments need to be directed more generally to people of younger ages in Europe. If equality is important enough additional investment should specifically be directed to disadvantaged individuals during childhood. Furthermore, high levels of life cycle income inequality and a high skill level increase the optimal amount of investments during younger adulthood. In a unified Europe, the effectiveness of policies to reduce inequality would be higher.

Suggested Citation

  • Pfeiffer, Friedhelm & Reuß, Karsten, 2011. "Human capital investment strategies in Europe," ZEW Discussion Papers 11-033, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  • Handle: RePEc:zbw:zewdip:11033
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    File URL: https://www.econstor.eu/bitstream/10419/45644/1/659506262.pdf
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    Cited by:

    1. Pfeiffer, Freidhelm & Reuß, Karsten, 2011. "Strategien der Humankapitalbildung in Europa: Eine Wohlfahrtsanalyse," ZEW Wachstums- und Konjunkturanalysen, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research, vol. 14(4), pages 8-9.
    2. Pfeiffer, Friedhelm & Reuß, Karsten, 2013. "Education and lifetime income during demographic transition," ZEW Discussion Papers 13-021, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

    More about this item

    Keywords

    human capital investment; life cycle skill formation; welfare function; Europe;

    JEL classification:

    • D87 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Neuroeconomics
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth

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