Suppose that she invests in a college education

Reference no: EM13689539

a) Decipict Sara's optimal stock of health capital at age 18, with a high school diploma and a wage of $8 per hour.

b) Suppose that she invests in a college education, expecting to get a better and higher wage job. Show how her optimal stock of health capital changes by the age of 30 due to the increased wage. Then, show how her education would affect her optimal health stock if education also made her a more efficient producer of health.

c) Suppose that after age 30 her wage stays the same. As she ages, show what happens to her optimal stock of health capital, assuming that the depreciation rate of health increases with age.

Reference no: EM13689539

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