This paper extends Becker's basic model on investment in human capital by introducing effort as a decision variable. Based on this extended model we consider the efficiency of two popular study-grant schemes and propose a third which unequivocally increases the student's effort and may thereby...

The modified theory of the Illyrian firm was developed, in part, to correct a perversity exhibited by the traditional theory of the Illyrian firm--that output rises in response to a fall in output price or a rise in fixed costs. We show that while this revised model has solved the problem for...