Wage growth, human capital and financial investment

Abstract

The aim of this paper is to explore the relationship between wage growth, human capital and investment in financial assets at the individual level. We investigate this relationship using data from five waves of the British Household Panel Survey. We exploit panel data enabling us to determine the change in real wages experienced by individuals across four different time horizons, 1995-96, 1995-98, 1995-2000 and 2000-1. Our findings support a positive association between financial assets and wage growth with this relationship becoming more pronounced over time. In addition, our results suggest that investment in financial assets is positively associated with returns to human capital investment.