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Human Capital and Public Policy

Author

Listed:
  • Chaitali Sinha

    (Chaitali Sinha, Department of Economics, Jadavpur University, Kolkata and School of Environment, Education and Development, University of Manchester, United Kingdom. E-mail: chai_sinha@yahoo.co.in)

Abstract
This article surveys the theoretical and empirical literature on investment in human capital and the effect of public policies. Empirical literature shows that education carries considerable amount of risk and only 9 per cent of the variability of the returns to college education are forecastable at the time of making college choices. However, uncertain future returns in human capital investment may increase or decrease investment in skill formation. Individuals may prefer to stay in school longer with increasing risk in future earnings. As schooling and training are the two essential elements of investment in human capital, public policies become important for the incentive to acquire human capital. The link between public policies manifested in terms of taxation and subsidies generate interesting outcomes. While in some cases there may be little or no impact of taxation or subsidies on human capital formation, these may more often hamper accumulation of skill. This article discusses these and several other dimensions associated with human capital formation in developing economies. JEL Classification: H21, H23, H24, J24, J38.

Suggested Citation

  • Chaitali Sinha, 2014. "Human Capital and Public Policy," South Asian Journal of Macroeconomics and Public Finance, , vol. 3(1), pages 79-125, June.
    • Handle: RePEc:sae:smppub:v:3:y:2014:i:1:p:79-125
    DOI: 10.1177/2277978714525307
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    More about this item

    Keywords

    Human capital; uncertainty; public policy; tax; subsidy;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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