According to human capital theory, which of the following is not a reason college graduates earn more than those with only a high school degree?
A)College graduates insist on a financial return on their human investments.
B)College graduates are made more productive by their greater training.
C)Jobs that require more education must pay higher wages to attract enough workers.
D)Income effects are higher for jobs requiring more education.

Question

Quizplus · Accepted Answer

Income effects are not a reason for the wage gap between college graduates and high school graduates according to human capital theory. Income effects refer to the value individuals place on leisure time and how that affects their labor supply. However, college graduates do earn more because they have invested in their human capital and are more productive as a result, jobs that require more education generally pay more because they require a specific skill set, and college graduates demand a financial return on the investment they made in their education.

According to Human Capital Theory, Which of the Following Is