Human Capital and Capital Market Equilibrium
University of Chicago, Chicago, IL 60637
G. William Schwert
University of Rochester, Rochester, NY 14627
and National Bureau of Economic Research
Journal of Financial Economics, 4 (January 1977) 95-125
This paper finds that extending popular two-parameter models of capital
market equilibrium to allow for the existence of non-marketable human capital
does not provide better empirical descriptions of the expected return-risk
relation for marketable securities than those that come out of simpler models.
This conclusion arises from the fact that relations between the return on
human capital and the returns on various marketable assets are weak, so that
the model that includes human capital leads to estimates of risk for marketable
assets indistinguishable from those of simpler models.
Key words: Human capital, Capital asset pricing model
JEL Classifications: G12, G14, J33
Cited 76 times in the SSCI and SCOPUS through 2019
© Copyright 1977, Elsevier
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