Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/88602
Authors: 
Kroencke, Tim A.
Muehler, Grit
Sprietsma, Maresa
Year of Publication: 
2013
Series/Report no.: 
ZEW Discussion Papers 13-108
Abstract: 
Human capital contracts give private investors the right to share of students' future earnings in return for a financial contribution during their studies. Although still rarely used, human capital contracts could not only help to completement limited public funding for higher education but might also be an alternative to traditional financial assets. Using a dataset covering 1% of German households for the period 1995-2009, we analyse the return and risk properties that can be expected from human capital contracts. We find that funds of human capital contracts provide low risk exposures to stocks and bonds. As a result, risk-adjusted returns of funds of human capital contracts are signicantly positive under fairly weak conditions. Thus, human capital contracts potentially offer large diversification benefits for investors and might be a way to improve the state's educational budget
Subjects: 
human capital returns
human capital contracts
risk and return of non-traded assets
mean-variance spanning tests
JEL: 
I21
J24
G11
G12
Document Type: 
Working Paper

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