Young people with little `social or health capital' may be more likely to take up hazardous consumption and shun investments in human capital, raising their likelihood of a `rags to rags' sequence. First, diminishing marginal utility could raise the marginal benefit of hazardous consumption and...

This paper documents that virtually all of the growth in the skilled wage premium over the 1980s in the United States was confined to metropolitan areas. Explanations for the growing skilled premium will therefore need to take location into account.