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The effect of uncertain returns on human capital investment patterns

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Abstract

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.

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Authors and Affiliations

  1. Mount Holyoke College, USA

    James Monks

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  1. James Monks
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Monks, J. The effect of uncertain returns on human capital investment patterns. Atlantic Economic Journal 26, 413–419 (1998). https://doi.org/10.1007/BF02299453

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  • DOI: https://doi.org/10.1007/BF02299453

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