If wages rise for manufacturing jobs that do not require a college degree, all else equal, demand for human capital investment _____, and the rate of return from human capital investment _____.

Question

Quizplus · Accepted Answer

If wages for jobs that do not require a college degree increase, the incentive to invest in human capital (such as obtaining a college degree) decreases because the opportunity cost of not working in those higher-paying jobs increases, leading to a fall in demand for human capital investment. Consequently, the rate of return from human capital investment also falls as the wage differential between jobs requiring a degree and those that do not decreases.

If Wages Rise for Manufacturing Jobs That Do Not Require