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
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Springer in its journal Journal of Evolutionary Economics.
Volume (Year): 13 (2003)
Issue (Month): 1 (02)
Contact details of provider:
Web page: http://link.springer.de/link/service/journals/00191/index.htm
Other versions of this item:
- 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.
- 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.
- 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
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Michael Kopel & Herbert Dawid, 1998. "On economic applications of the genetic algorithm: a model of the cobweb type," Journal of Evolutionary Economics, Springer, vol. 8(3), pages 297-315.
- Freeman, Richard B, 1975. "Supply and Salary Adjustments to the Changing Science Manpower Market: Physics, 1948-1973," American Economic Review, American Economic Association, vol. 65(1), pages 27-39, March.
- Brunello, Giorgio & Lucifora, Claudio & Winter-Ebmer, Rudolf, 2001.
"The Wage Expectations of European College Students,"
IZA Discussion Papers
299, Institute for the Study of Labor (IZA).
- Brunello, Giorgio & Lucifora, Claudio & Winter-Ebmer, Rudolf, 2001. "The Wage Expectations of European College Students," CEPR Discussion Papers 2817, C.E.P.R. Discussion Papers.
- Giorgio Brunello & Claudio Lucifora & Rudolf Winter-Ebmer, 2001. "The wage expectations of European college students," Economics working papers 2001-08, Department of Economics, Johannes Kepler University Linz, Austria.
- Andrea Gaunersdorfer & Cars Hommes & Florian O.O. Wagener, 2001.
"Bifurcation Routes to Volatility Clustering,"
Tinbergen Institute Discussion Papers
01-015/1, Tinbergen Institute.
- Robert H. Topel, 1997. "Factor Proportions and Relative Wages: The Supply-Side Determinants of Wage Inequality," Journal of Economic Perspectives, American Economic Association, vol. 11(2), pages 55-74, Spring.
- Brock, W.A. & Hommes, C.H., 1996.
"A Rational Route to Randomness,"
9530r, Wisconsin Madison - Social Systems.
- de la Croix, David, 1996.
"Economic development and convergence clubs: the role of inherited tastes and human capital,"
Discussion Papers (IRES - Institut de Recherches Economiques et Sociales)
1996024, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES), revised 00 Oct 1996.
- de la Croix, David, 2001. "Growth dynamics and education spending: The role of inherited tastes and abilities," European Economic Review, Elsevier, vol. 45(8), pages 1415-1438, August.
- Bala, Venkatesh & Sorger, Gerhard, 2001. "A Spatial-Temporal Model of Human Capital Accumulation," Journal of Economic Theory, Elsevier, vol. 96(1-2), pages 153-179, January.
- Charles T. Clotfelter & Michael Rothschild, 1993. "Introduction to "Studies of Supply and Demand in Higher Education"," NBER Chapters, in: Studies of Supply and Demand in Higher Education, pages 1-10 National Bureau of Economic Research, Inc.
- Arifovic, Jasmina, 1994. "Genetic algorithm learning and the cobweb model," Journal of Economic Dynamics and Control, Elsevier, vol. 18(1), pages 3-28, January.
- Freeman, Richard B, 1975. "Legal "Cobwebs": A Recursive Model of the Market for New Lawyers," The Review of Economics and Statistics, MIT Press, vol. 57(2), pages 171-79, May.
- repec:att:wimass:9621 is not listed on IDEAS
- Lux, Thomas, 1998. "The socio-economic dynamics of speculative markets: interacting agents, chaos, and the fat tails of return distributions," Journal of Economic Behavior & Organization, Elsevier, vol. 33(2), pages 143-165, January.
- Borghans, Lex & De Grip, Andries & Heijke, Hans, 1996. "Labor market information and the choice of vocational specialization," Economics of Education Review, Elsevier, vol. 15(1), pages 59-74, February.
- Siow, Aloysius, 1984. "Occupational Choice under Uncertainty," Econometrica, Econometric Society, vol. 52(3), pages 631-45, May.
- Duchesne, I. & Nonneman, W., 1998. "The Demand for Higher Education in Belgium," Economics of Education Review, Elsevier, vol. 17(2), pages 211-218, April.
- Gary S. Becker, 1975. "Human Capital: A Theoretical and Empirical Analysis, with Special Reference to Education, 2nd ed," NBER Books, National Bureau of Economic Research, Inc, number beck75-1, July.
- Orazem, Peter & Tesfatsion, Leigh S., 1997.
"Macrodynamic Implications of Income Transfer Policies for Human Capital Investment and School Effort,"
Staff General Research Papers
1683, Iowa State University, Department of Economics.
- Orazem, Peter & Tesfatsion, Leigh, 1997. " Macrodynamic Implications of Income-Transfer Policies for Human Capital Investment and School Effort," Journal of Economic Growth, Springer, vol. 2(3), pages 305-29, September.
- Emilio Barucci, 1999. "Heterogeneous beliefs and learning in forward looking economic models," Journal of Evolutionary Economics, Springer, vol. 9(4), pages 453-464.
- Carl Chiarella, 1992. "The Dynamics of Speculative Behaviour," Working Paper Series 13, Finance Discipline Group, UTS Business School, University of Technology, Sydney.
- Zarkin, Gary A., 1983. "Cobweb versus rational expectations models : Lessons from the market for public school teachers," Economics Letters, Elsevier, vol. 13(1), pages 87-95.
- David Card & Thomas Lemieux, 2001.
"Dropout and Enrollment Trends in the Postwar Period: What Went Wrong in the 1970s?,"
in: Risky Behavior among Youths: An Economic Analysis, pages 439-482
National Bureau of Economic Research, Inc.
- David Card & Thomas Lemieux, 2000. "Dropout and Enrollment Trends in the Post-War Period: What Went Wrong in the 1970s?," NBER Working Papers 7658, National Bureau of Economic Research, Inc.
- Richard B. Freeman, 1976. "A cobweb model of the supply and starting salary of new engineers," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 29(2), pages 236-248, January.
- Brock, William A. & Hommes, Cars H., 1998.
"Heterogeneous beliefs and routes to chaos in a simple asset pricing model,"
Journal of Economic Dynamics and Control,
Elsevier, vol. 22(8-9), pages 1235-1274, August.
- Zarkin, Gary A, 1985. "Occupational Choice: An Application to the Market for Public School Teachers," The Quarterly Journal of Economics, MIT Press, vol. 100(2), pages 409-46, May.
- Droste, E. & Hommes, C.H. & Tuinstra, J., 1999.
"Endogenous Fluctuations under Evolutionary Pressure in Cournot Competition,"
CeNDEF Working Papers
99-04, Universiteit van Amsterdam, Center for Nonlinear Dynamics in Economics and Finance.
- Droste, Edward & Hommes, Cars & Tuinstra, Jan, 2002. "Endogenous fluctuations under evolutionary pressure in Cournot competition," Games and Economic Behavior, Elsevier, vol. 40(2), pages 232-269, August.
- Quinn, Robert & Price, Jamie, 1998. "The demand for medical education: an augmented human capital approach," Economics of Education Review, Elsevier, vol. 17(3), pages 337-347, June.
- Bala, Venkatesh & Sorger, Gerhard, 1998. "The evolution of human capital in an interacting agent economy," Journal of Economic Behavior & Organization, Elsevier, vol. 36(1), pages 85-108, July.
- Julian R. Betts, 1996. "What Do Students Know about Wages? Evidence from a Survey of Undergraduates," Journal of Human Resources, University of Wisconsin Press, vol. 31(1), pages 27-56.
- Konrad, Kai A. & Kovenock, Dan, 2009.
"The Lifeboat Problem,"
CEPR Discussion Papers
7424, C.E.P.R. Discussion Papers.
- Kai A. Konrad & Dan Kovenock, 2011. "The Lifeboat Problem," Working Papers the_lifeboat_problem, Max Planck Institute for Tax Law and Public Finance.
- Konrad, Kai A. & Kovenock, Dan, 2011. "The lifeboat problem," Discussion Papers, Research Professorship & Project "The Future of Fiscal Federalism" SP II 2011-106, Social Science Research Center Berlin (WZB).
- Konrad, Kai A. & Kovenock, Dan, 2012. "The lifeboat problem," Munich Reprints in Economics 13962, University of Munich, Department of Economics.
- Dong, Cao & Yaozhong, Wang, 2009. "Controlling endogenous fluctuations of human capital investment in an OLG economy," Economic Modelling, Elsevier, vol. 26(6), pages 1335-1340, November.
- Lines Marji & Westerhoff Frank, 2012.
"Effects of Inflation Expectations on Macroeconomic Dynamics: Extrapolative Versus Regressive Expectations,"
Studies in Nonlinear Dynamics & Econometrics,
De Gruyter, vol. 16(4), pages 1-30, October.
- Lines, Marji & Westerhoff, Frank, 2009. "Effects of inflation expectations on macroeconomic dynamics: Extrapolative versus regressive expectations," BERG Working Paper Series 68, Bamberg University, Bamberg Economic Research Group.
- Pietro Dindo & Jan Tuinstra, 2011.
"A Class of Evolutionary Models for Participation Games with Negative Feedback,"
Society for Computational Economics, vol. 37(3), pages 267-300, March.
- Pietro Dindo & Jan Tuinstra, 2010. "A class of evolutionary models for participation games with negative feedback," LEM Papers Series 2010/14, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
- Michael Wegener & Frank Westerhoff, 2012. "Evolutionary competition between prediction rules and the emergence of business cycles within Metzler’s inventory model," Journal of Evolutionary Economics, Springer, vol. 22(2), pages 251-273, April.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Guenther Eichhorn) or (Christopher F Baum).
If references are entirely missing, you can add them using this form.