TY  - RPRT
        AU  - Rodríguez-Planas, Núria
AU  - Westergren, Kerstin
        TI  - Inflation and Human Capital Investment Decisions
        PY  - 2026/Feb/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 18405
        UR  - https://www.iza.org/index.php/publications/dp18405
        AB  - This study investigates the impact of inflation on human capital investment decisions. Using
a specially designed survey we estimate the causal effect of recent price level increases on the
graduation plans of over 1,200 U.S. university students. We find that inflation caused over half
of the respondents to alter their plans, with nearly 60 percent of these opting to accumulate less
human capital and the remainder increasing their human capital by taking additional courses or
pursuing double majors or advanced degrees. A comparison of empirical treatment estimates to
predictions derived from our theoretical framework reveals that inflation-driven higher direct costs
reduced human capital investments, particularly among those for whom inflation had reduced their
ability to pay bills. Conversely, while some students merely postponed graduation because they
believed inflation would not persist, higher inflation-induced uncertainty in the post-graduation
labor market generally caused greater human capital accumulation, especially among economically
vulnerable students and those whose confidence in finding a job after graduation had declined.
The study concludes with policy implications.
        KW  - human capital Investments
KW  - inflation
KW  - survey data
KW  - expected outcomes
        ER  -