Essays on the economics of human capital

My research focuses on human capital accumulation of individuals through schooling and its relationship to economic growth. In this dissertation, I explore the impact of growth in human capital on U.S. economic growth and analyze the role of economic environments in explaining changing patterns of investment in human capital by U.S. workforce. In the first chapter, the emphasis is on the contribution of rising school quality to U.S. economic growth, the last two focus on the impacts of changing economic environments on schooling decisions.;In chapter one, I explore how much U.S. labor quality has increased due to rising school spending. Given a drastic increase in the U.S. public school spending per pupil during the 20th century, accounting only for the increases in mean years of schooling of the workforce may miss out on a significant part of labor quality growth. In order to estimate the impact of rising school spending on labor quality growth, I examine how earnings of younger cohorts compare to those of older cohorts, beyond the estimated Mincer return to schooling. My findings are that rising school spending is about half as important as increases in mean years of schooling for U.S. labor quality growth, and that labor quality growth explains about one quarter of the growth in labor productivity between 1967 and 2000. The growth in human capital of the workforce due to rising school spending explains only a quarter of the increase in empirical returns to schooling, and a rising skill premium explains the rest. Controlling for the rise in skill premium is important---failing to do so would double the estimated impact of the increased expenditure on growth in human capital.;In the second chapter, I examine a link between a rise in skill premium and the increases in school spending in the U.S. When the skill premium rises over time, the present discounted value of individual future income increases more for higher levels of education, inducing individuals to choose more spending while in school. In order to quantify the impact of a rise in skill premium on the trends in U.S., I analyze a benchmark model where the skill premium rises, but individuals have static expectations, when making schooling decisions, about the rise in skill premium with trend growth in the average wage rate. I then compare its prediction on the trends in school spending per pupil with that from a model where individuals expect the skill premium to continue to rise. I find that the benchmark model explains three quarters of the rise in school spending per pupil in the data, with about a modest fraction of this reflecting an anticipated growth in the average wage rate. If individuals act as though the skill premium will continue to rise, the model implies that school spending increases further, but its quantitative impact is secondary.;In chapter three, I explore the role of changes in anticipated wage growth rates in explaining the increased dispersion in U.S. educational rates of attainment. Recent cohorts show a pattern of increasing schooling dispersion. Especially, college attendance rates became more dispersed across different measured ability and family income groups. Individuals who anticipate a higher wage growth have incentives to acquire more education, expecting a higher return to schooling due to higher expected wages after leaving school than while in school. So changes in anticipated wage growth rates by groups can potentially help explain increasing dispersion in schooling across ability and family income groups. I find that this channel is potentially powerful in generating significant variations in schooling across groups and over time. For a modest extent of anticipation of wage growth by groups of previous cohorts to persist, two thirds of the increasing schooling dispersion across ability and family income quartiles is explained by differences in anticipated wage growth rates.