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education affects labor supply only via its effect on wages; in the

literature on the return to education it allows unbiased estimates

to be obtained from selected samples; and it substantially reduces

the extent to which income taxation discourages human capital

accumulation, and hence the extent to which taxation retards

transitional and/or endogenous growth.

This paper used a very simple, but compelling, model (i.e., the

conclusion is not due to the simplicity of the model) to demonstrate

that education and work decisions are likely to be mutually

dependent. That is, optimizing behavior implies that individuals are

likely to have positive correlations between investment in human

capital and work. Moreover, simple statistical modelling across

extensive micro datasets strongly supports the theory, and indicates

that it is an empirically important phenomenon. To illustrate the

order of magnitude involved, the male correlation in the U.S.

suggests that a college degree relative to a high-school diploma has

roughly the same correlation with hours of work as being male

relative to female.

Bibliography

, Colm Harmon, and Hessel Oosterbeek, "A Review of the

Schooling/Earnings Relationship with Tests for Publication

Bias" NBER Working Paper 7457, 2000.

Altonji, Joseph G, "Intertemporal Substitution in Labor Supply:

Evidence from Micro Data" Journal of Political Economy, June

1986, 94(3), S176-215.

Barro, Robert J and Xavier Sala-i-Martin, Economic Growth, New York:

McGraw-Hill, 1995.

Becker, Gary S, "A Theory of the Allocation of Time" Economic

Journal, September 1965, 75(2), 493-517.

, Human Capital, 3rd ed, Chicago: University of Chicago

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