Resource title

How risky is investment in human capital?

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Resource description

The risk of investment in schooling has largely been ignored. We assess the variance in the rate of return by surveying the international empirical literature from this fresh perspective and by simulating risky earnings profiles in alternative options, choosing parameters on basis of the very limited evidence. The distribution of rates of return appears positively skewed. Our best guess of ex ante risk in university education is a coefficient of variation of about 0.3, comparable to that in a randomly selected financial portfolio with some 30 stocks. Allowing for stochastic components in earnings also markedly affects expected returns.

Resource author

Joop Hartog, Hans van Ophem, Simona Maria Bajdechi

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Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/18899

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Adapt according to the presented license agreement and reference the original author.