Human Capital Investment under Quasi-Geometric Discounting

Robert Reed (rreed@cba.ua.edu), Karl Boulware and Ejnidu Ume (umee@miamioh.edu)
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Robert Reed: University of Alabama
Ejnidu Ume: Miami University

Economics Bulletin, 2016, vol. 36, issue 4, 1986-1992

Abstract: Recent work by Laibson (1997) identifies that individuals are excessively impatient in the short-run, but wish to become more patient over time. It is often argued that such a time-inconsistency problem distorts individuals' savings decisions. The objective of this paper is to study human capital accumulation in the presence of a time-inconsistency problem. In doing so, we explain that many policies put into place to take advantage of the inter-personal benefits from human capital accumulation may also be important for resolving 'intra-personal' planning problems. Our results also shed light on the role of compulsory education.

Keywords: Human Capital; Quasi-Geometric Discounting (search for similar items in EconPapers)
JEL-codes: C6 E2 (search for similar items in EconPapers)
Date: 2016-11-09
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