Question

In the human capital model, predict how each of these following changes would affect the proportion of people choosing to get an education and explain why. In each case, assume nothing else changes.

a. Due to new factories opening up, the wages of people with less education rise.

b. Schools reorganize themselves and manage to fit the same amount of learning into one less year, so school takes one less year to complete.

c. For some crotchety kids-these-days reason, people have become more impatient, and they discount the future more heavily.

Answer 1

A. Due to new factories opening up, the wages of people with less education rise which provides better standard of living to the employees and the workers. Better standard of living increases the proportion of people choosing to get an education as the employees & workers are able to afford better education and improved health facilities for themselves & their family.

B. As the school manage to fit the same amount of learning into one less year, the opportunity cost of earnings forgone due to education falls & proportionately more people choose to get an education.

C. For some crotchety kids-these-days reason, people have become more impatient, leading to higher education charges which in turn reduces the proportion of people who can afford to get educational facilities.