The Risk-Return Trade-Off in Human Capital Investment

Charlotte Christiansen, Juanna Joensen and Helena Nielsen

No 1962, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: In this paper we analyze investments in human capital assets in a way which is standard for financial assets, but not (yet) for human capital assets. We study mean-variance plots of human capital assets. We compare the properties of human capital returns using a performance measure and by using tests for mean-variance spanning. A risk-return trade-off is revealed, which is not only related to the length of education but also to the type of education. We identify a range of educations that are efficient in terms of investment goods, and a range of educations that are inefficient, and may be chosen for consumption purposes.

Keywords: human capital investment; efficient frontier; mean-variance analysis; educational choice (search for similar items in EconPapers)
JEL-codes: I21 J24 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2006-02
New Economics Papers: this item is included in nep-edu and nep-hrm
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Citations: View citations in EconPapers (14)

Published - revised version published in: Labour Economics, 2007, 14 (6), 971-986

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Related works:
Journal Article: The risk-return trade-off in human capital investment (2007)
Working Paper: The Risk-Return Trade-Off in Human Capital Investment (2006)
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