Exam 9: Investments in Human Capital: Education and Training

Fewer women leaving the labor market to raise children has given women the incentive to acquire ________ on-the-job training early in their careers, yielding age-earnings profiles which are ________ than they were about twenty years ago.

Mary can take a class that costs $10,000. The class teaches her a skill that will only be useful during the second year after training. What must the minimum pay for the skill in the second year for Mary to take the class? She could alternatively invest the $10,000 and earn an annual rate of return of 20%.

Since 1980, the college enrollment rate of both male and female recent high school graduates has ________, while the ratio of earnings of college to high-school graduates has ________.

Which of the following is a cost of going to college?

Nina (age 19) would be more likely to obtain a college education if

Which of the following will increase the likelihood a person will go to college?

In the signaling model, assume high school graduates are paid a stream of income whose present value is $200,000. College graduates are paid a stream of income whose present value is X. College education costs higher-productivity workers $50,000 and lower-productivity workers $150,000. What value of X will cause higher-productivity workers to go to college and lower-productivity workers to not go to college?

Suppose the wages of both high school and college graduates decrease by $2,000 per year. In response to the opportunity cost, the number of people attending college will consequently ________, while in response to the earnings differential between high school and college graduates, college enrollments will ________.

A college education for Bill, using the market rate of interest of 5%, has a net present value of $50,000. Which of the following is an internal rate of return consistent with this present value?

A nation shifts from a very progressive tax system (with a higher tax rate on higher incomes) to a tax system that tax all wages at the same rate. Both systems collect about the same revenues. This shift is likely to

Which of the following is NOT an investment in human capital?

Employees tend to obtain on-the-job training

Human capital is

Present-oriented people discount future earnings ________ forward-looking people.

Workers with relatively high levels of natural ability are quite likely to attend college. This can cause ________ bias when estimating educational returns because ________.

In the labor market, signals are

Approximately ________ of all wealth in the United States is in the form of human capital.

John is trying to decide whether to go to college or to start working right out of high school. College as an investment is most likely justified when ________ is greater than the cost of going to college.

For education to serve as a signal

Which of the following would likely, in the long run, reduce the observed rate of return from going to college?