Volume 24, Number 3 (Summer) 1989

van Imhoff, Evert. 1989. "Optimal Investment in Human Capital Under Conditions of Nonstable Population." Journal of Human Resources 24(3):414-432.

This paper analyses optimal investment in physical and human capital when the (exogenous) rate of population growth changes. The growth model describes a closed economy with overlapping generations and homogeneous human capital. The optimal growth path is characterized by two groups of optimality condition: a Generalized Golden Rule for optimal investment in physical capital; and a continuum of Golden Rules of Education, corresponding to the continuum of active generations. These conditions for optimal investment in human capital can be interpreted in terms of the familiar equality of Discounted costs and returns. The model is illustrated with a numerical simulation.