Three essays on investment in human capital /

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Danyal, Shah
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Middle Tennessee State University
This dissertation deals with three interrelated essays on investment in human capital which are covered in chapters two, three, and four. In the purview of the human capital theory, prominent economists have addressed the role of new and better skills in creating job opportunities for workers, not only to find and hold on to jobs, but also to improve their living standards through higher earnings by upgrading their skills. Many researchers have also addressed the role of education on health and lifestyle choices with mixed findings.
In chapter two, we investigate the "Impact of Computer Skills on Wages" in the U.S. using NLSY79 panel data set, staggered every two years from 2000-2006 for a cross-section of 12,686 individuals. Specifically, the essay examines the controversy in the literature whether there is a wage premium due to the acquirement of computer skills by individuals confirming the skill biased technological change (SBTC) hypothesis. By defining computer skills as having a computer with Microsoft Windows or NT, at home and using the fixed-effects model and the instrumental variable technique, the study finds that individuals possessing computer skill do, indeed, earn a wage premium, confirming the SBTC hypothesis.
Chapter three titled "Effects of Education on Health: A Panel Data Study from NLSY" investigates the effect of educational attainment on the individual's health status as measured by the inability to work for health reasons. Based on the unique data set and the Arellano-Bond estimation methodology, the study finds that educational attainment has a positive effect on the quality of an individual's health status. The chapter also bridges the gap in the literature by using the robust fixed-effects model and Arellano-Bond to analyze the impact of education on the health status after controlling for the unobserved individual heterogeneity and the endogeneity problem arising from the interaction between education and the measure of the health status.
The third essay, "Impact of Education on Lifestyle Choices: A Panel Data Study from NLSY79," examines the effect of education on different lifestyle variables using NLSY79 panels for 1992 1994 and 1998 in chapter 4. Using smoking, drinking, marijuana use, and cocaine use as lifestyle variables, the study addresses the joint determination of lifestyle variables within the framework of Seemingly Unrelated Regression (SUR) model. After controlling for the unobserved individuals heterogeneity by robust fixed-effects model extended to SUR model, the study finds that educational attainment does not necessarily have a significant effect on lifestyle choices. While future study with adequate data base and alternative methodology may find different results and explanations, perhaps, the finding of this essay suggests that it is the health knowledge that affects lifestyle choices (such as warning labels on cigarettes, alcohol products, and nutritional contents on processed foods) rather than the educational of individuals The marginal contribution of this essay to literature is the use of the robust fixed-effect model in context of SUR model to analyze the impact of the cross and within correlations of educational attainment on the lifestyle choices.
Adviser: B. Fayissa.