Abstract
This empirical study advances the understanding of the theory of investment in human capital by outlining limitations to its applicability in the context of return to education. The study uses the concept of moral hazard to examine circumstances when financial support for education purpose generates less desirable post-graduation incomes. This study explores the relationship between financial support and post-graduation incomes using data from the Survey of Income and Program Participation that is designed to measure the economic situation of individuals. Results suggest that students are less likely to engage in moral hazardous behavior to the degree to which they are older and to the degree to which they receive costlier financial assistance.
Notes
As a reference, in 2001 the median earnings of men who worked full-time year-round were $38,275, while women’s median earnings were $29,215 (DeNavas-Walt and Cleveland 2002).
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The authors gratefully acknowledge funding provided by the Washburn School of Business Beatrice Fellowship Fund, which reimbursed costs associated with this research project.
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Walker, R.L., Florea, L. Easy-Come-Easy-Go: Moral Hazard in the Context of Return to Education. J Bus Ethics 120, 201–217 (2014). https://doi.org/10.1007/s10551-013-1656-8
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DOI: https://doi.org/10.1007/s10551-013-1656-8