Human Capital and the Life-Cycle

Abstract

In what follows I develop a life-cycle model of labor supply and human capital accumulation. The model assumes that the individual maximizes lifetime utility by allocating time to work, leisure and human capital formation; and the model allows for two different kinds of human capital -- "training" and "experience" (i.e., "learning by doing"). The model thus effects a synthesis of diverging viewpoints in the analysis of labor supply in two important respects. First; it offers a unified treatment of the relationship between wage rates, hours of work and investment in human capital; and second, it provides a comprehensive treatment of the nature and significance of "human capital" itself.