Abstract:
Using Quarterly Labour Force Survey data, this paper examines two important issues
pertaining to human capital theory in the context of Sri Lanka. The conceptual
framework of analysis in this paper is the Mincerian earnings function. In the presence
of more than one form of investment in human capital, a rational individual would list
out all opportunities in a descending order of rate of returns to investment and choose
the one with the highest returns. In this paper, rate of returns to schooling and vocational
training are estimated and it is found that in terms of financial returns, vocational
training to be worth more than schooling. This suggests that rational individuals should
choose vocational training over schooling.
