Schooling investment and competition in the labor market.: A game of conflict

Abstract

The aim of this paper is to find the optimal schooling investment to obtain a paid position in the labor market. The analysis uses the approach of a conflict game that considers the existing competition in the labor market and the limited demand for human capital. It is found that the game is the strategic complements type, that is, each player intensifies his actions in response to the intensification of the other player’s actions. The Nash Equilibrium is the optimal investment that equals the utility and it represents a ratio of the expected wage. If a higher investment is made, it would represent a loss. This scenario can be compared to one of a competition for a patent, innovation or rent seeking