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Optimal Life-Cycle Education Decisions of Atomistic Individuals

  • Bernhard Skritek
  • Jesus Crespo Cuaresma
  • Arkadii V. Kryazhimskii
  • Klaus PrettnerEmail author
  • Alexia Prskawetz
  • Elena Rovenskaya
Chapter

Abstract

We analyze the optimal life-cycle education decision of a single atomistic individual and show that the standard result of part-time education and part-time work throughout the life-cycle holds only under very special and unrealistic assumptions. Once these assumptions are relaxed, different education strategies become optimal. These range from switching back and forth between work and education (educational leave) to full-time education at the beginning of life and full-time work when older (classical schooling). The resulting strategies for investing in education are better aligned with the observable pattern of educational investments over the life cycle. The particular path chosen by individuals then depends on other aspects, e.g., on the individual’s lifetime horizon or on nonlinearities in human capital accumulation with respect to time invested in education.

Keywords

Human capital Optimal lifetime education Economic growth Aging Optimal control Singular control 

JEL Codes

C60 O41 I20 

Notes

Acknowledgements

We would like to thank the editor who handled our submission, Alberto Bucci, as well as an anonymous referee and Uwe Sunde for valuable comments and suggestions.

Funding This research did not receive any specific grant from funding agencies in the public, commercial, or not-for-profit sectors.

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Copyright information

© The Author(s) 2019

Authors and Affiliations

  • Bernhard Skritek
    • 1
  • Jesus Crespo Cuaresma
    • 2
  • Arkadii V. Kryazhimskii
    • 3
  • Klaus Prettner
    • 4
    Email author
  • Alexia Prskawetz
    • 1
  • Elena Rovenskaya
    • 3
  1. 1.Institute of Statistics and Mathematical Methods in EconomicsVienna University of TechnologyViennaAustria
  2. 2.Department of EconomicsVienna University of Economics and BusinessViennaAustria
  3. 3.International Institute of Applied Systems Analysis (IIASA)LaxenburgAustria
  4. 4.Institute of EconomicsUniversity of HohenheimStuttgartGermany

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