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Title:The risk-return trade-off in human capital investment PDF Logo
Authors:Christiansen, Charlotte
Schr√łter Joensen, Juanna
Skyt Nielsen, Helena
Issue Date:2006
Series/Report no.:IZA Discussion Papers 1962
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.
Subjects:educational choice
efficient frontier
human capital investment
mean-variance analysis
JEL:I21
J24
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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