Explain the theory of investment in human capital and the specific role that education plays in the theory.
What will be an ideal response?
The central view of human capital theory is that education is an investment that can be analyzed in the same sense that decisions to purchase capital goods are analyzed. Specifically, educational institutions take less-productive workers as raw materials and make them more-productive workers through the education process. The MRPs of the workers are increased; they are made more valuable to employers; and, in turn, the workers receive higher incomes, which can be viewed as a return on their investment in human capital.
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The exchange rate last month was $1 = 1.15 euros. This month it is $1 = 1.35 euros. We can say that the value of the dollar
A) fell; causing net exports to increase and aggregate demand to rise. B) fell; causing net exports to decrease and aggregate demand to fall. C) increased; causing net exports to decrease and aggregate demand to fall. D) increased; causing net exports to decrease and aggregate demand to rise.
Which of the following is not the result of wage stickiness in an economic downturn?
A. Actual wages are temporarily above the market-clearing level. B. Cyclical unemployment. C. A surplus of labor. D. A shortage of labor.
Imagine you own a machine that produces perfectly authentic and legal $100 bills. You would use this machine until
a. the bills became worthless b. the total cost began to fall c. the marginal cost was $100 d. the variable cost began to rise e. the marginal revenue began to fall
The legislation which outlawed asset-purchase mergers that would substantially reduce competition was the:
A. Sherman Act. B. Clayton Act. C. Robinson-Patman Act. D. Celler-Kefauver Act.