Copyright © 2009 Pearson Education, Inc Topic 4. Chapters 9 & 5 Human Capital
Copyright © 2009 Pearson Education, Inc Figure 9.1: The Optimum Acquisition of Human Capital
Copyright © 2009 Pearson Education, Inc Table 9.1: Changes in College Enrollments and the College/High School Earnings Differential, by Gender,
Copyright © 2009 Pearson Education, Inc Figure 9.2: Alternative Earnings Streams
Copyright © 2009 Pearson Education, Inc Present value approach If PV>Cost then investment in additional schooling. Invest until PV=Cost Cost: Out-of-pocket cost Fore-gone earnings Psychic losses
Copyright © 2009 Pearson Education, Inc Predictions of the theory Forward-looking people are more likely to go to college (low discount rate, r) Most college students will be young College attendance will decrease if the costs of college rise College attendance will increase if the gap between the earnings of college graduate and high school graduate widens
Copyright © 2009 Pearson Education, Inc Measuring returns to schooling Use multiple regression approach Earnings = a + b*schooling Difficulties 1. Proper measures of costs 2. Non-wage returns of education 3. Ability biases 4. Quality of schooling 5. Loss of leisure
Copyright © 2009 Pearson Education, Inc Issues in education Sheepskin effect (diploma effect) Social return vs. private return to education Screening and signaling
Copyright © 2009 Pearson Education, Inc Figure 9.8: The Lifetime Benefits and Costs of Educational Signaling
Copyright © 2009 Pearson Education, Inc Figure 9.9: Requiring a Greater Signal May Have Costs without Benefits
Copyright © 2009 Pearson Education, Inc Figure 9.3: Money Earnings (Mean) for Full-Time, Year-Round Male Workers, 2005
Copyright © 2009 Pearson Education, Inc Figure 9.4: Money Earnings (Mean) for Full-Time, Year-Round Female Workers, 2005
Copyright © 2009 Pearson Education, Inc Skills Skill acquired on the job General human capital vs. specific human capital Who bears the cost Why age-earnings profile is concave?
Copyright © 2009 Pearson Education, Inc Table 5.2: Hours Devoted by Firms to Training a New Worker during First Three Months on Job, 1992
Copyright © 2009 Pearson Education, Inc Figure 5.7: Productivity and Wage Growth, First Two Years on Job, by Occupation and Initial Hours of Employer Training
Copyright © 2009 Pearson Education, Inc Who Bears the Cost of Training?
Copyright © 2009 Pearson Education, Inc Figure 9.5: Investments in On-the-Job Training over the Life Cycle
Copyright © 2009 Pearson Education, Inc Table 9.2: Labor Force Participation Rates, Part-Time Employment Status, and Hours of Work in the United States, by Gender (2005)
Copyright © 2009 Pearson Education, Inc Figure 9.6: The Increased Concavity of Women’s Age/Earnings Profiles
Copyright © 2009 Pearson Education, Inc Table 9.3: Percentages of Women among College and University Graduates, by Degree and Field of Study, 1971 and 2004
Copyright © 2009 Pearson Education, Inc Table 9.4: International Comparisons of Schooling,