Aggregate unemployment may affect individual returns to education through qualification-specific responses in participation and wage bargaining. This paper shows that an increase in regional unemployment by 1% decreases returns to education by 0.005 percentage points. This implies that higher...

This paper shows that investment inhuman capital may be another reason for incentive wages in addition to "retain, recruit and motivate". It is shown under which circumstances firms pay wages in excess of the market clearing level in order to induce workers to invest. Investment in human capital...