Human Capital and Economic Growth pp 27-54 | Cite as

# Optimal Life-Cycle Education Decisions of Atomistic Individuals

## 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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