LABRST 3A03 Lecture Notes - Lecture 7: Human Capital
16 Nov 2017
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Appropriate role of government: private markets may not provide socially optimal amounts of traing: Imperfect information: regulatory restrictions, training subsidies to disadvantaged could: Increase working hours: raise wages above the poverty line. Income stream a did not complete high school. Income stream b completed high school: the only forgone cost is section a, benefits are b and e. In an exam analyze and what are the cost and benefits when comparing 2 individuals. Optimal human capital investment r is the internal rate of return i is downward sloping because i= delta y/y+d. In the context of investments in human capital: e) Education as a signal to see your standard of work. Offered wage and signalling cost schedules low ability type has no incentive to gain education. Suppose 40% of all potential workers are highly skilled: d) The decision to invest in human capital: e)
