Exam 9: Investments in Human Capital: Education and Training

Age/earnings profiles fan out by educational attainment level.According to human capital theory,this phenomenon occurs because

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

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.

The wages paid by two careers,X and Y,have the same present value.Which of the following increase the likelihood that career X will pay more in wages over time (summed over the lifetime without discounting)?

If both the demand for and the supply of college graduates shift to the left,then the equilibrium wage would ________ and the number of college graduates would ________.

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

Suppose that it costs $15,000 per year to obtain a four-year college education.Assume that the real interest rate is 5% and that there are 45 years beyond college graduation during which an individual will work.What after-tax returns on the investment are necessary to justify making the investment on purely monetary grounds? If the post-schooling period were changed by 5 years in either direction,how would your calculation change? What does the latter exercise show?

What is meant by the term present oriented? How is an individual's degree of present orientation captured in the human capital investment model? If,other things equal,an individual is more present oriented,how does this affect the likelihood that the individual will invest in additional schooling? Explain using the present value method.

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?

Which of the following is NOT an expense of acquiring human capital?

Before biases are considered,the monetary rate of return to investments in education is

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 ________.

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

Women generally receive ________ on-the-job training than men,causing their age-earnings profiles to be ________ than those of men.

Suppose an individual expects to receive a payment of $5,000 in 10 years.What is the present value of the payment if the discount rate is 8%? What is the present value of the payment if the discount rate is 4%? What principle is illustrated by this example?

For education to serve as a signal,

In the labor market,signals are

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

Which of the following best explains why the most rapid increase in a person's wages usually occurs at younger ages,giving a concave shape to the age/earnings profile?

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 ________.