Labor Economics · intro
What moves on the Human Capital & the Mincer Equation diagram
A higher outside wage raises the opportunity costopportunity costWhat you give up to get something, the value of the next-best alternative you didn't choose. of schooling, moving the break-even point later and making early leaving rational for more students.
Studying pays when the earnings curve beats the wage you could earn right now.
A mining boom sends unskilled and trades wages soaring.
The no-study wage line jumps up, and the break-even point slides later.
More students rationally leave school early. This is exactly what Australian data showed during the 2000s boom.
Examiners ask this as: mining boom, school leaver wages, unskilled wages rise, trades boom, leave school for work.
Other scenarios on Human Capital & the Mincer Equation