G2TT
来源类型Discussion paper
规范类型论文
来源IDDP10416
DP10416 Risk and Returns to Education Over Time
Francisco Gomes; Jeffrey Brown; Chichun Fang
发表日期2015-02-15
出版年2015
语种英语
摘要We model education as an investment in human capital that, like other investments, is appropriately evaluated in a framework that accounts for risk as well as return. In contrast to dominant wage-premia approach to calculating the returns to education, but which implicitly ignores risk, we evaluate the returns by treating the value of human capital as the price of a non-tradable risky asset. We do so using a lifecycle framework that incorporates risk preferences and earnings risk, as well as a progressive income tax and social insurance system. Our baseline estimate is that a college degree provides a $440K dollar increase in annual certainty-equivalent consumption. Although significantly smaller than traditional estimates of the value of education, these returns are still large enough to offset both the direct and indirect cost of college education for a large range of plausible preference parameters. Importantly, however, we find that accounting for risk reverses the finding from the education wage-premia literature regarding the trends in the returns to education. In particular, we find that the risk-adjusted gains from college completion actually decreased rather than increased in the recent period. Overall, our results show the importance of earnings risks in assessing the value of education.
主题Financial Economics ; Labour Economics ; Public Economics
关键词Human capital Idiosyncratic earnings risk Life-cycle models
URLhttps://cepr.org/publications/dp10416
来源智库Centre for Economic Policy Research (United Kingdom)
资源类型智库出版物
条目标识符http://119.78.100.153/handle/2XGU8XDN/539248
推荐引用方式
GB/T 7714
Francisco Gomes,Jeffrey Brown,Chichun Fang. DP10416 Risk and Returns to Education Over Time. 2015.
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