How large is the stock component of human capital?

This paper examines the value of an individual's human capital and the associated return on human capital using U.S. data on male earnings and financial asset returns. We measure the size of the stock component of human capital and assess the implications for life-cycle portfolio decisions. We find that (1) the value of human capital is far below the value implied by discounting earnings at the risk-free rate and (2) the stock component of the value of human capital is smaller than the bond component at all ages and typically averages less than 35 percent of the value of human capital. Data properties that increase the stock component of the value of human capital also act to lower the stock share held in financial wealth.