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Human Capital Contracts in Chile: An Exercise Based on Income Data on chilean HE Graduates

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  • Felipe Andrés Lozano-Rojas

Abstract

Given that a significant proportion of the Chilean education system is financed with household resources, we present human capital contracts (HCC) as an option for higher education financing for students facing financial constraints, but who could use their expected future income flows as collateral. We analyze the feasibility of HCC implementation in Chile over a set of college majors. We find that HCC can partially fund any college major in Chile and finance some majors completely, under certain conditions. Among the variables analyzed, those affecting most severely the contract pricing are initial wage level after graduation and graduation rate.

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  • Felipe Andrés Lozano-Rojas, 2012. "Human Capital Contracts in Chile: An Exercise Based on Income Data on chilean HE Graduates," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 49(2), pages 185-215, November.
    • Handle: RePEc:ioe:cuadec:v:49:y:2012:i:2:p:185-215
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    More about this item

    Keywords

    Higher education returns; education financing; human capital; contracts; human capital earning functions; income contingent schemes;
    All these keywords.

    JEL classification:

    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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