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Investment in U.S. Education and Training

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  • Jacob Mincer
Abstract
The current high rates of return to human capital stimulate a supply response via increased investments in education and training. The so increased human capital stock exerts downward pressures on the rates of return that reduce the skill differential in wages. This paper reports estimates of: the responses of investments in post-secondary education, measured by enrollments, to changes in the rate of return; responses of investment in job training, measured by incidence; and effects of accumulated human capital stocks, measured by educational attainment, on educational wage differentials. Enrollment responses and attainment effects are shown to be separated by a time lag of about a decade. The parameter estimates are based on annual CPS and NCES data, covering a recent 25 year period. If demands for human capital cease their acceleration, the rate of return is expected to decline about 25% over the current decade, judging by the estimated parameters and lags.

Suggested Citation

  • Jacob Mincer, 1994. "Investment in U.S. Education and Training," NBER Working Papers 4844, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:4844
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    References listed on IDEAS

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    Cited by:

    1. Van Reenen, John & Dearden, Lorraine & Reed, Howard, 2000. "Who Gains when Workers Train? Training and Corporate Productivity in a Panel of British Industries," CEPR Discussion Papers 2486, C.E.P.R. Discussion Papers.
    2. Gavrel, Frédéric & Lebon, Isabelle & Rebière, Thérèse, 2016. "Formal education versus learning-by-doing: On the labor market efficiency of educational choices," Economic Modelling, Elsevier, vol. 54(C), pages 545-562.
    3. Lloyd-Ellis, Huw & Roberts, Joanne, 2002. "Twin Engines of Growth: Skills and Technology as Equal Partners in Balanced Growth," Journal of Economic Growth, Springer, vol. 7(2), pages 87-115, June.
    4. Konrad, Kai A., 1999. "Privacy, time consistent optimal labor income taxation and education policy," IZA Discussion Papers 82, Institute of Labor Economics (IZA).
    5. Huw Lloyd-Ellis & Joanne Roberts, 2000. "Twin Engines of Growth," Cahiers de recherche CREFE / CREFE Working Papers 118, CREFE, Université du Québec à Montréal.
    6. Tse, Chung Yi, 2000. "Monopoly, human capital accumulation and development," Journal of Development Economics, Elsevier, vol. 61(1), pages 137-174, February.
    7. Agupusi, Patricia, 2019. "The effect of parents’ education appreciation on intergenerational inequality," International Journal of Educational Development, Elsevier, vol. 66(C), pages 214-222.
    8. Krebs, Tom & Kuhn, Moritz & Wright, Mark L. J., 2016. "Insurance in Human Capital Models with Limited Enforcement," IZA Discussion Papers 9948, Institute of Labor Economics (IZA).
    9. Seung Mo Choi, 2008. "How Large are Learning Externalities? Measurement by Calibration," Working Papers 2008-26, School of Economic Sciences, Washington State University.
    10. Gilberto Antonelli & Roberto Antonietti & Giovanni Guidetti, 2010. "Organizational Change, Skill Formation, Human Capital Measurement: Evidence From Italian Manufacturing Firms," Journal of Economic Surveys, Wiley Blackwell, vol. 24(2), pages 206-247, April.
    11. Diana Loubaki, 2012. "On The Mechanics Of The Brain-Drain Reduction In Poorest Developing Countries," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 37(3), pages 75-106, September.
    12. Gerhard Glomm & B. Ravikumar, 1998. "Flat-Rate Taxes, Government Spending on Education, and Growth," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 1(1), pages 306-325, January.
    13. Konrad, Kai A., 2001. "Privacy and time-consistent optimal labor income taxation," Journal of Public Economics, Elsevier, vol. 79(3), pages 503-519, March.
    14. Jacob Mincer, 1996. "Changes in Wage Inequality, 1970-1990," NBER Working Papers 5823, National Bureau of Economic Research, Inc.
    15. Hong Tan & Lopez-Acevedo, Gladys, 2003. "Mexico : in-firm training for the knowledge economy," Policy Research Working Paper Series 2957, The World Bank.
    16. Tom Krebs & Moritz Kuhn & Mark Wright, 2017. "Under-Insurance in Human Capital Models with Limited Enforcement," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 25, pages 121-150, April.

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