Investment in U.S. Education and TrainingThe current high rates of return to human capital stimulate a supply response via increased investments in education and training. The so increased human capital stock exerts downward pressures on the rates of return that reduce the skill differential in wages. This paper reports estimates of: the responses of investments in post-secondary education, measured by enrollments, to changes in the rate of return; responses of investment in job training, measured by incidence; and effects of accumulated human capital stocks, measured by educational attainment, on educational wage differentials. Enrollment responses and attainment effects are shown to be separated by a time lag of about a decade. The parameter estimates are based on annual CPS and NCES data, covering a recent 25 year period. If demands for human capital cease their acceleration, the rate of return is expected to decline about 25% over the current decade, judging by the estimated parameters and lags. |
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average baby boom baby bust bil GNP bil billion changing profitabilities Clotfelter COLL college graduates Column decade demand for human demand for skills depreciation Duncan and Stafford Earnings econometricians educational attainment educational wage differentials employer enrollment rates EOPP expenditures experience factors Figure Freeman GNP bil GNP gopher at nber.harvard.edu GRADS high school graduates human capital stock indirect instructions inside investments in job Jacob Mincer job training investments John Whalley Jovanovic Labor Economics Labor Mobility levels list of NBER Macroeconomics males Market Market Failure measured mobility Murphy NBER Working Papers NBER WP On-the-Job Training opportunity costs Papers and Reprints Partial Subscription payoff period population post-secondary education predicted profitability and volumes PSID rates of return ratio regression relative supply return to schooling school education shown Studies supply effect supply responses Survey Table 5a U.S. Department variable wage function wage growth wage profiles young cohort