Munich Personal RePEc Archive

Investment in Human Capital and the Appropriate Discount Rate

Renas, Stephen and Cebula, Richard (1971): Investment in Human Capital and the Appropriate Discount Rate. Published in: Social and Economic Studies , Vol. 21, No. 1 (29 March 1972): pp. 61-71.

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This study develops a theory of investment in human capital which rests on the assumption that an individual will choose to remain in school if the present value of the future income stream associated with additional education exceeds that associated with the present level of education. The paper hypothesizes that the marginal rate of time preference is a function of one's socioeconomic status and thereby provides a systematic framework for explaining dropout rates.

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