Essays on human capital investments, economic inequality and growth

This Ph.D. thesis consists of three self-contained chapters and has been structured to assess aggregate and individual implications of human capital investments in higher education on income and wealth inequality, financial assets, and economic growth. The first chapter addresses the idea that societies require both public and private sources of educational investments and is not an exclusive analysis of each source individually. By understanding the interplay of both sources of education, better macroeconomic outcomes can be achieved with potential increases in overall welfare. After it is established that educational investments from different sources can generate certain advantages in the aggregate economy, the individual promise of education is the next step. It is essential to provide certainty of valuable returns regarding these investments to individuals, especially after observing that costs for higher education have been increasing dramatically in some countries. Chapter two takes the first steps in this direction by analyzing the wealth returns to education. Wealth is considered one of the main providers of household financial stability, thus it is a primary target for finding determinants with means to increase it. A priority in this chapter is to determine the existence of a potential causal relationship between education and wealth and how it evolves over the life cycle. Double efforts are set to understand similar areas in which education might provide beneficial returns to individuals. The third and final chapter estimates the causal effects of education on different financial assets. A better understanding of financial assets allows individuals not only to better allocate their resources and obtain higher returns but to have monetary safety nets during negative shocks in different stages of their life. Consequently, by building a deeper understanding of the benefits of increasing public and private investment in higher education, my hope is that this research generates stronger foundations for societies to construct better education systems, especially in low and middle-income countries. Despite the high aggregate economic benefits arising from education, the principal target of this research is individuals. I would like to motivate them to learn about the longlasting benefits of education during every period of their life. Furthermore, by providing them with equal access and higher initial opportunities in education, prosperous, inclusive, and fair sustainable development can be achieved.