New | Contents | Home | OGU Home

"On Deriving the Individual's Demand Function for Educational Investment," Harvard Institute of Economic Research, Discusssion Papaer, No.154, December 1970, 37pp.

• [Abstract]
• [Keywords]
• [Full Text]

[Abstract]

This paper is an attempt to analyze the individual's decision making on education and to derive the demand function for educational investment. First, the individual's activities concerning education are formulated into a model of overtime resource allocation. It is assumed that a complete plan for education is made at some age by the individual with perfect foresight. Two kinds of allocation are considered: allocation of time between education and labor, and allocation of income between paying for education and savings. It is assumed that the increase in earnings in the future is the only return from education; education is treated solely as investment. We also assume that the capital market is perfect. The objective of the individual in planning his education is to maximize the sum of net discounted earnings over his lifetime period. The model is an extension of those in the theory of capital accumulation, and the problem turns out to be of the optimal control type. The demand function for educational investment is then derived by examining the effects of changes in parameters on the optimal plan for education. This task is carried out by using a method of comparative dynamics. Under certain simplifying assumptions, various properties of the demand function are obtained.

[Keywords]

educational investment, decision making on education, overtime resource allocation, allocation of time, allocation of income, theory of capital accumulation, optimal control problem, comparative dynamics

[Full Text]

Harvard Institute of Economic Research, Discusssion Papaer, No.154 (December 1970, revised February 1971) [PDF: 2.1MB]

Back to Pub List Index | Back to Pub List Index (Japanese)

Top of Page | New | Contents | Home | OGU Home