Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/89880
Authors: 
Koerselman, Kristian
Uusitalo, Roope
Year of Publication: 
2013
Series/Report no.: 
IZA Discussion Paper 7752
Abstract: 
Investing in human capital increases lifetime income, but these investments may involve substantial risk. In this paper we use a Finnish panel spanning 22 years to predict the mean, the variance and the skew of the present value of lifetime income, and to calculate certainty equivalent lifetime income at different levels of education. We find that university education is associated with about a half a million euro increase in discounted lifetime disposable income compared to vocational high school. Accounting for risk does little to change this picture. By contrast, vocational high school is associated with only moderately higher lifetime income compared to compulsory education, and the entire difference is due to differential nonemployment.
Subjects: 
lifetime income
risk
education
human capital
JEL: 
C33
I24
J31
Document Type: 
Working Paper

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