Human capital accumulation over the life cycle under multiple sources of uncertainty

Saïd Hanchane () and David Touahri ()
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Saïd Hanchane: LEST - Laboratoire d'Economie et de Sociologie du Travail - AMU - Aix Marseille Université - CNRS - Centre National de la Recherche Scientifique
David Touahri: LEST - Laboratoire d'Economie et de Sociologie du Travail - AMU - Aix Marseille Université - CNRS - Centre National de la Recherche Scientifique

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Abstract: In this paper, we analyse the human capital accumulation process over the life cycle of individuals under the hypothesis of earnings uncertainty. To do so, we develop a continuous time dynamic programming model which takes into account several sources of uncertainty, concerning the human capital accumulation process and the labour market. In particular, the risks over future wage rates and over-education are explicitly taken into account. The model permits an in-depth study of each source's effect of uncertainty on human capital investment. We demonstrate that investment in education may be encouraged, depending on the individual's perception of the different risks.

Keywords: Human capital; Life cycle; Risk; Stochastic optimal control (search for similar items in EconPapers)
Date: 2004
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00010248
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