Human capital determines aggregate productivity, inequality, social mobility, and economic growth and development. However, three problems arise in financing human capital investments. First, because individuals would like to borrow against future earnings to finance up-front schooling costs, “lifecycle” borrowing constraints may inhibit investment. Second, parents cannot pass debts on to their children, giving rise to intergenerational constraints that prevent low-income parents from investing in promising young children. Finally, uncertainty in future earnings can limit incentives to invest. By developing and estimating a unified framework, this project designs and evaluates new strategies that can address all three of these issues jointly.
This research project designs and evaluates new strategies that can address the issues of financing human capital investments by developing and estimating a unified framework.
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