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ON THE APPROPRIATE MODEL FOR ANALYZING INVESTMENT IN HUMAN CAPITAL WHERE THE CAPITAL MARKET IS IMPERFECT
Author(s) -
Gustman Alan L.
Publication year - 1973
Publication title -
review of income and wealth
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.024
H-Index - 57
eISSN - 1475-4991
pISSN - 0034-6586
DOI - 10.1111/j.1475-4991.1973.tb00893.x
Subject(s) - economics , imperfect , investment (military) , human capital , physical capital , return of capital , consumption (sociology) , fixed investment , return on investment , financial capital , capital (architecture) , capital intensity , microeconomics , monetary economics , capital formation , investment performance , production (economics) , market economy , social science , philosophy , linguistics , archaeology , politics , sociology , political science , law , history
This paper suggests a modification of the Becker–Chiswick model for analyzing investment in human capital where the capital market is imperfect. The modification essentially involves the addition of a consumption function to the model. As a result it is possible to include the effects of human capital investment on a student's income expectations, on consumption, and thereby on the availability of funds for the student to finance investment in human capital.