Mardi 7 mai 2019, 14 heures, salle Maurice Desplas
Paul JACKSON (University of California, Irvine )
"Human Capital, Credit Constraints, and Underemployment"
Abstract :
This paper develops a model of human capital investment in a frictional labor market with heterogenous jobs and workers.
Highly-educated workers become underemployed by accepting an offer at a job that does not require human capital to be productive. The model is used to study the efficient level of human capital investment and underemployment and the effect of increasing student loan borrowing limits on welfare.
A normative analysis shows that the decentralized equilibrium is never efficient, does not exhibit enough human capital investment, creates too many low-skill jobs, and has an underemployment rate that is higher than the efficient allocation. Increasing student loan borrowing limits can increase welfare by expanding both human capital investment and the creation of high-skill jobs.
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