Securitization of Human Capital Contracts
Abstract
As financial innovation expands into new domains, education financing is increasingly being reinterpreted through capital market mechanisms. This paper explores how human capital contracts can evolve from individual agreements into tradable financial instruments through the process of securitization.
The analysis outlines a three-stage development model: the creation of individual contracts, the formation of diversified funds, and the emergence of secondary markets. By pooling contracts and transforming future income streams into securities, the approach enables risk diversification and attracts a broader range of investors.
The study demonstrates that securitization can significantly enhance access to funding for education while simultaneously reducing capital costs. It also highlights the potential for improved efficiency in the education market, as investment decisions begin to reflect expected future earnings and economic value.
References
Friedman, M. (1982). Capitalism and Freedom.
OECD (2007). Policy Brief on Human Capital.
Institute for Market Economics (Bulgaria). Securitization frameworks.
Bulgarian Law on Special Purpose Investment Companies.
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
By submitting a paper for publishing the authors hereby comply with the following provisions: 1. The authors retain the copyrights and only give the journal the right for first publication while licensing the work under Creative Commons Attribution License, which grants permissions to others to share the contribution citing this journal as first publication of the text. 2. The authors may enter separate, additional contractual relations for non-exclusive distribution of the published version of the work in this journal (e.g. to upload it in an institutional depository, or to be published in a book), given that they cite the first publication in this journal. 3. The authors are allowed and are encouraged to publish their works online (e.g. to upload it in an institutional depository, personal websites, social networks, etc.) before, during, and after the submission of the paper here, because this may lead to productive exchange, as well as earlier and larger referencing of the published works (see The Effect of Open Access).
