Robert Lucas argues that there are ________ returns to human capital,and these productivity increases are not completely captured by individuals as they decide how much education to purchase.As a result,the market produces ________ education and training.
A)increasing; too much
B)decreasing; too much
C)increasing; too little
D)decreasing; too little

Question

Quizplus · Accepted Answer

According to Robert Lucas, there are increasing returns to human capital, which means that the more education and training a person has, the more productive they will be. However, individuals may not capture all of the productivity gains from education, meaning that the market may not produce enough education and training. This suggests that there is a market failure and that the optimal level of education and training is likely higher than the market outcome. Therefore, choice C, increasing returns to human capital and too little education and training, is the best answer.

Robert Lucas Argues That There Are ________ Returns to Human