Abstract
In this article, we propose to re-examine the relationship between training-returns into studying the factors that influence individual decisions. Previously, it was mainly the expected returns that encourage the individual to rationally make the investment decision. However, this relationship between training and expected earnings is not so obvious. This depends, among other things, on the effect of the depreciation of the stock of acquired human capital, which we propose a new formalization. Let us thus detect a relation which shows that the variation of the net salary is positive as long as the variation of the gross salary is positive. In other words, the net investment will only be positive if the depreciation does not exceed the gross investment. If applicable, the effect of the depreciation will lead to a reduction in the wage gap between skilled and unskilled workers. This result means that even when returns are different, wage convergence may still exist. The results of this study are applicable in terms of budget and forecast of funds intended for training, and to trace the policies of labor market regulation and the problem of unemployment of graduates. Keywords: Investment, human capital, depreciation, individual gain, model. JEL classification: E24, I21, J24, J31. DOI: 10.7176/JEP/11-12-10 Publication date: April 30 th 2020
Highlights
Investing in human capital remains one of the main themes of economic policy today in both developed and developing countries
The central assumption of all human capital models is that education is recognized as the essential determinant of the structure and evolution of individual incomes
The purpose of this article is to establish a new relationship between training and wages in the context of human capital
Summary
Investing in human capital remains one of the main themes of economic policy today in both developed and developing countries. Walras (1874) emphasizes the differentiation between the concept of capital (something that can be used more than once) and its service It introduces individual aptitudes into the price determination process, and from there replaces the thesis that wages are formed by the play of supply and demand on the labor market, according to marginal productivity of work, which is organically linked to the level of training. Analysis of investment decisions The decision to invest individually in education is the most influential and decisive investment because it will mark our whole life, and the most cabalistic, which is why economists have tried to decipher these symbols and limit the ambiguity that surrounds it In this regard, we will present and extend the model of Ben Porath, which explains a production function of human capital, and we seek to determine the equilibrium as well as its implications for given price conditions, under a certain number of assumptions. This means that investment in training is just like any other type of investment that is going in the opposite direction with the interest rate and increasing it penalizes investment in training
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