Adela Garcia-aracil, Jose-gines Mora and Luis

The concept of human capital is the idea that people spend on themselves in diverse ways, not for the sake of present enjoyment, but for the sake of future monetary and nonmonetary returns. They may purchase health care; they may voluntarily acquire additional education; they may spend time searching for a job with the highest possible rate of pay, instead of accepting the first offer that comes along; they may purchase information about job opportunities; they may migrate to take advantage of better employment opportunities; and the may choose jobs with low pay but high learning potential in preference to dead-end jobs with high pay. All these phenomena – health, education, job search, information retrieval, migration, and in-service training may be viewed as investment rather than consumption, whether undertaken by individuals on their own behalf or undertaken by society on behalf of its members. Consequently, education represents more than an investment in human capital (Becker 1993) because it allows individuals to learn and acquire skills that will fundamentally shape their behaviour, beliefs and role in society (Haveman & Wolfe 1984). Education appears to be related to people’s success in making many economic decisions; longer schooling, in particular, promotes more efficient decision-making processes related to the labour market through the acquisition of information that has a positive impact on personal choices (Arrow 1997). Evaluations of the appropriate level of investment in schooling have typically focused on market outcomes, particularly labour market returns. The relationship between earnings and schooling has been widely studied at both the theoretical and empirical levels. The relationship is simple to state: more educated people enjoy a higher level of earnings than people with a lower level of education. Longer schooling and training improve the chances of employment (Iyigun & Owen 1999; Rivera-Batiz 1992), reduce unemployment duration (Kettunen 1997; Kiefer 1985) and positively influence income through higher labour market