Endogenous fluctuations in the demand for education
AbstractEnrolment rates to higher education reveal quite large variation over time which cannot be explained by productivity shocks alone. We develop a human capital investment model in an overlapping generations framework that features endogenous fluctuations in the demand for education. Agents are heterogeneous in their beliefs about future wage differentials. An evolutionary competition between the heterogeneous beliefs determines the fraction of the newborn generation having a certain belief. Costly access to information on the returns to education induces agents to use potentially destabilizing backward looking prediction rules. Only if previous generations experience regret about their human capital investment decisions, agents will choose a more sophisticated prediction rule that dampens the cycle. Access to information becomes key for stable flows to higher education. Â expectations ; human capital investment ; endogenous fluctuations ; intergenerational spill-overs evolutionary dynamics ; bifurcation analysis -- Einschreibungen an Fachhochschulen und UniversitÃ¤ten weisen starke zyklische Schwankungen auf, die nicht allein durch ProduktivitÃ¤tsschocks erklÃ¤rt werden kÃ¶nnen. Es wird ein Humankapitalmodell mit Ã¼berlappenden Generationen vorgestellt, das die Eigenschaft besitzt, Zyklen in der Nachfrage nach Bildung endogen zu erklÃ¤ren. Im Modell sind die Akteure heterogen in Bezug auf ihre Voraussagen Ã¼ber zukÃ¼nftige Lohndifferentiale. Ein evolutionÃ¤rer Wettbewerb unter den Voraussagemethoden bestimmt den Anteil der Akteure, der ein bestimmtes Prognoseinstrument verwendet. Da der Zugang zu Informationen Ã¼ber zukÃ¼nftige Humankapitalrenditen mit Kosten verbunden ist, weichen die Akteure auf vergangenheitsorientierte Voraussagemethoden aus, die destabilisierend wirken kÃ¶nnen. Nur dann, wenn frÃ¼here Generationen die Art und Weise wie sie prognostizierten bereuen, werden die Akteure kompliziertere, zukunftsgerichtete, Prognoseinstrumente wÃ¤hlen, welche die Zyk
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Bibliographic InfoArticle provided by Springer in its journal Journal of Evolutionary Economics.
Volume (Year): 13 (2003)
Issue (Month): 1 (02)
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Other versions of this item:
- Neugart, M. & Tuinstra, J., 2001. "Endogenous Fluctuations in the Demand of Education," CeNDEF Working Papers 01-04, Universiteit van Amsterdam, Center for Nonlinear Dynamics in Economics and Finance.
- Neugart, Michael & Tuinstra, Jan, 2001. "Endogenous fluctuations in the demand for education," Discussion Papers, Research Unit: Labor Market Policy and Employment FS I 01-209, Social Science Research Center Berlin (WZB).
- Michael Neugart & Jan Tuinstra, 2002. "Endogenous fluctuations in the demand for education," Computing in Economics and Finance 2002 107, Society for Computational Economics.
- C60 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - General
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
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