Human capital and financial equilibrium

Yoran Landskroner, Jacob Paroush

Research output: Contribution to journalArticlepeer-review


This article investigates the effect of incorporating human capital-an expansion of the investment opportunity set-into the analysis of portfolio investment decisions. The "production function" of human capital displays decreasing returns to scale. The return on human capital is a product of two factors: a "market" return and return unique to each individual. Financial equilibrium results are derived and tested empirically using U.S. data and an international sample. The main findings are that demand for financial assets relates positively to human capital risk and negatively to financial capital risks.

Original languageEnglish
Pages (from-to)443-452
Number of pages10
JournalJournal of Economics and Business
Issue number4
StatePublished - Dec 1984


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