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Risk Aversion and College Subject

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Author Info
Paolo Buonanno ()
Dario Pozzoli ()

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Abstract

We investigate whether individual attitudes toward risk may explain why, though there exist huge di erences in the employment returns of graduates by elds of study, the most demanded subjects by the economy are less frequently chosen. The econometric methodology is based on a three step procedure which controls for selectivity bias in the rst stage (Heckman, 1979; Lee, 1983; Trost and Lee, 1984). Using a large data set from a survey on the 2001 Italian high school graduates, the main results indicate that students take into account the a priori probability of unsuccess when choosing the college subject. Moreover, students coming from a lower socio-economic background display more risk aversion.

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File URL: http://wwwdata.unibg.it/dati/bacheca/670/28498.pdf
File Format: application/pdf
File Function: Version, 11-2007
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Publisher Info
Paper provided by University of Bergamo, Department of Economics in its series Working Papers with number 0707.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length: 21 pages
Date of creation: Nov 2007
Date of revision:
Handle: RePEc:brg:wpaper:0707

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Web page: http://www.unibg.it/struttura/struttura.asp?cerca=dse_intro
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Related research
Keywords: Risk aversion; College subject; Self-selection;

Find related papers by JEL classification:
C34 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Truncated and Censored Models
J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
I21 - Health, Education, and Welfare - - Education - - - Analysis of Education

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  1. Rochat, Denis & Demeulemeester, Jean-Luc, 2001. "Rational choice under unequal constraints: the example of Belgian higher education," Economics of Education Review, Elsevier, vol. 20(1), pages 15-26, February. [Downloadable!] (restricted)
  2. Figlio, David N. & Page, Marianne E., 2002. "School Choice and the Distributional Effects of Ability Tracking: Does Separation Increase Inequality?," Journal of Urban Economics, Elsevier, vol. 51(3), pages 497-514, May. [Downloadable!] (restricted)
    Other versions:
  3. Christian Belzil & Marco Leonardi, 2007. "Risk Aversion and Schooling Decisions," Working Papers 0716, Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure. [Downloadable!]
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  4. Christian Dustmann, 2004. "Parental background, secondary school track choice, and wages," Oxford Economic Papers, Oxford University Press, vol. 56(2), pages 209-230, April. [Downloadable!] (restricted)
  5. Robert Haveman & Barbara Wolfe, 1995. "The Determinants of Children's Attainments: A Review of Methods and Findings," Journal of Economic Literature, American Economic Association, vol. 33(4), pages 1829-1878, December. [Downloadable!] (restricted)
  6. Christian Belzil & Marco Leonardi, 2006. "Can Risk Aversion Explain Schooling Attainments? Evidence From Italy," Working Papers 0607, Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure. [Downloadable!]
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  7. Ignacio Palacios-Huerta, 2003. "An Empirical Analysis of the Risk Properties of Human Capital Returns," American Economic Review, American Economic Association, vol. 93(3), pages 948-964, June. [Downloadable!]
    Other versions:
  8. Christiansen, Charlotte & Joensen, Juanna Schroter & Nielsen, Helena Skyt, 2007. "The risk-return trade-off in human capital investment," Labour Economics, Elsevier, vol. 14(6), pages 971-986, December. [Downloadable!] (restricted)
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  9. Bertola, Giuseppe & Checchi, Daniele, 2002. "Sorting and Private Education in Italy," CEPR Discussion Papers 3198, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  10. Altonji, Joseph G, 1993. "The Demand for and Return to Education When Education Outcomes Are Uncertain," Journal of Labor Economics, University of Chicago Press, vol. 11(1), pages 48-83, January. [Downloadable!] (restricted)
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  11. Joop Hartog & Hans Van Ophem & Simona Maria Bajdechi, 2007. "Simulating the Risk of Investment in Human Capital," Education Economics, Taylor and Francis Journals, vol. 15(3), pages 259-275. [Downloadable!] (restricted)
  12. Trost, Robert P & Lee, Lung-Fei, 1984. "Technical Training and Earnings: A Polychotomous Choice Model with Selectivity," The Review of Economics and Statistics, MIT Press, vol. 66(1), pages 151-56, February. [Downloadable!] (restricted)
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