Endogenous Credit Constraints and Human Capital Formation (original) (raw)

RePEc: Research Papers in Economics, 2000

Abstract

This paper examines the impacts of endogenous credit constraints on labor supply, the accumulation of human capital, and consumption across agents that are heterogeneous in age, ability, and initial wealth. In our model, contrary to the standard human capital literature, credit constraints arise endogenously from default incentives. Building on the recent literature on sovereign debt, and most closely, the debt

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