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Author: Schumann, Paul Louis
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1. Schumann, Paul Louis
Investment in Human Capital: Work, Military Service, and College
Ph.D. Dissertation, Cornell University, 1983
Cohort(s): NLSY79
Publisher: UMI - University Microfilms, Bell and Howell Information and Learning
Keyword(s): College Education; Health/Health Status/SF-12 Scale; Human Capital Theory; Labor Supply; Military Service; Modeling, Probit

Since policymakers are concerned with the decisions made by youth with respect to their development and training, how these decisions affect potential earnings, and how these effects on potential earnings affect the relative attractiveness of alternative human capital investments, a good understanding of the demand for such investments is important. Previous studies of the demand for human capital investments, however, tended to focus on specific investments. This study presents a choice model in which the individual is faced with an array of discrete investment alternatives. The theoretical model allows for an arbitrary number of alternatives; the empirical implementation examines a limited set of alternatives for male high school graduates: civilian employment, military service, and college. The theoretical model was based on the assumption that individuals choose the human capital investment alternative that maximizes their utility. This assumption generated a general multiple outcome discrete choice model; other assumptions allowed the general model to be written as specific, estimable models, such as the multiple outcome probit model or the multiple outcome logit model. The study also generalizes corrections for sample selection bias to the multiple outcome case. The data set used to estimate the model was the NLSY 1979. Variables used in the analyses included experience, ability, race, marital status, health limitations, possession of a GED certificate, earnings, parents' education, number of siblings, parents' work status, and the unemployment rate. A general finding of the study was that individuals seem to respond to economic incentives in ways that one would expect. In particular, it was found that increases in costs tend to discourage investment and increases in benefits tend to encourage investment. For example, it was found that military enlistments were very elastic with respect to military pay. The results also provide support for the hypothesis that family background can play a significant role in the investment choice process.
Bibliography Citation
Schumann, Paul Louis. Investment in Human Capital: Work, Military Service, and College. Ph.D. Dissertation, Cornell University, 1983.