Human Capital Theory

There is a novel societal axiom - the more educated one becomes, the higher one’s chances of being more successful in life. For many families acquiring education for their children is believed to be the foundation of helping them advance their socio-economic status (ref 1). In the western societies where the mean age keeps increasing, due to an ageing of population, the educational sector has received diminishing financial support from the government (reference 2 about the fact that education is becoming more expensive,). This implies that universities are losing the subsidies they once received, and have to respond by raising the tuition fees. Increased tuition fees for students suggest that the opportunity cost - what one must give up in

Individuals and society, derive benefits from investing in people and education becomes the prime human capital investment ( ref Scott R. Sweetland). Three hypotheses will be formed: two on the individual and one on the national level. The relationship to be tested is between the education obtained and income earned. This relationship has been observed and studied by economists such as T. Dee, R. Layard, C. Harmon and G. Psacharopoulos. According to the latter, evidence suggests a causal positive effect of education on income (GEORGE PSACHAROPOULOS, 1994). Thus the following hypothesis can be

In the long run, a one year increase in education was found to lead to an average of 8% decrease in mortality of the male population that is below 50 years old (Kunst & Mackenbach, 1994). This is why the second hypothesis will test for a causal effect of different levels of education on the mortality rate on the individual level.

Hypothesis 2: There is significant negative causal effect of the level of education on the mortality rate on the individual level, in the period of 1993 to 2010, in the Netherlands at a 5% significance level.

These statements may not be valid on the aggregate level. Over the last century life expectancy and the level education have been increasing, causing debates and research to find a correlation between these variables (Cochrane, O'Hara, & Leslie, 1980). This is problematic since simultaneous causality could potentially have influence in this setting. Human capital theory could explain this: life expectancy could possibly increase the returns to education in the aggregate level (ref scott sweetland). According to the available data, the final hypothesis will test for a causal effect of life expectancy on the percentage of males who completed higher