The timing of investments in human capital is important. Since the net
present value of an investment in human capital may change over time, the
decision to invest should be made so as to maximize the net present value
of the investment. After sketching the proper decision rule in cases where
timing is important in an investment, the net present value of completing
eighth grade rises for nonwhites in the South. This finding suggests that it
might sometimes be wise to delay investments in education until the
students are older.
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