Models of Lifetime Human Capital Accumulation for Perfect and Imperfect Credit Markets

Human capital accumulation is essentially a kind of consumption behavior which spans one's entire life cycle. In this paper, we first propose a life cycle consumption model for a perfect and then extend it to an imperfect credit market. Our models imply that the personal lifetime funds one owns affect one's personal lifetime earning both in a perfect and an imperfect credit market and there exists a value of personal lifetime funds which can derive the maximum value of personal lifetime earning. However, ceteris paribus, one accumulates less human capital and consumes fewer goods in the latter.