In this thesis we study the effect of changes in the economic, demographic and social environment on an individual’s decision to invest in tertiary education. In doing so we consider how this decision interacts with various other choices that a person makes over the course of his or her life, including labour market participation, fertility and child care. The models used are necessarily dynamic in nature and assume that people are forward-looking. In most chapters we adopt a general equilibrium perspective, taking into account that individual choices jointly determine outcomes at the aggregate level and how these in turn affect the trade-offs faced by households and firms.
This thesis consists of two parts. In Part I we look at education in the broader context of human capital accumulation. An individual’s stock of human capital consists of all skills and knowledge he or she possesses that can be put to productive use. At the start of life this might be limited to some ‘innate ability’ but over the life cycle it expands through investment in education and by learning on the job. At the same time, some skills will deteriorate and part of the knowledge is forgotten. If the rate at which the process of human capital depreciation proceeds goes up with age then this might induce elderly people to withdraw from the labour market and to settle into retirement.
In Part II of the thesis we take into account the social environment in which an individual lives and how it influences education choices. First, we recognize that a household usually consists of more than one member and that interactions between these members shape household decisions. For example, couples will jointly determine how many children to have and in which way to allocate the time required for care. Second, at the moment an individual chooses whether to go to college or not he or she is usually still single, but expectations about the likelihood of marriage and the characteristics of a future spouse play an important role in this decision.