Heterogenous human capital: life cycle investment in health and education
University of Melbourne Author/sBasov, Suren
AffiliationEconomics and Commerce: Department of Economics
CitationsBasov, Suren (2002) Heterogenous human capital: life cycle investment in health and education.
Access StatusOpen Access
ISBN 0734024932, Working paper 838.
During the last forty years, economists have devoted a great deal of effort to developing the concept of human capital and applying it to explain investment in education, income inequality, and life-time earning profiles. Early contributions to the human capital theory suggested that there might exist several forms of human capital. In this paper I proposed a simple model that allows us to incorporate health-investment decisions into a life-cycle framework. The complementarity between savings, health, and education is created by an insurance motive for the accumulation of health. The model predicts a positive correlation between the health stock, education and savings rate for both high income countries and poor countries. I showed that investments in education are independent of health status for sufficiently high levels of health and increases in health if the health status is lo
Keywordshuman capital; heatlh; education; investment
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