Education Choice under Uncertainty

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Education Choice under Uncertainty

Author Info

Hogan, Vincent (University College Dublin)
Ian Walker (University of Warwick)

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Abstract

We apply the theory of real options to the problem of education choice when returns to education are uncertain. We show that the length of time spent in school will be an increasing function of the risk associated with education and not just the expected return. This fact has been neglected in much of the empirical literature on education.

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Paper provided by Royal Economic Society in its series Royal Economic Society Annual Conference 2002 with number 103.

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Date of creation: 29 Aug 2002
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Handle: RePEc:ecj:ac2002:103

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This paper has been announced in the following NEP Reports:

NEP-ALL-2002-07-08 (All new papers)
NEP-LTV-2002-07-04 (Unemployment, Inequality & Poverty)

Cited by:
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Budria, Santiago, 2006. "Schooling and the distribution of wages in the european private and public sectors," MPRA Paper 90, University Library of Munich, Germany. [Downloadable!]
Martins, Pedro S., 2004. "Firm-Level Social Returns to Education," IZA Discussion Papers 1382, Institute for the Study of Labor (IZA). [Downloadable!]
Other versions:
- Pedro S. Martins, 2004. "Firm-Level Social Returns to Education," CRIEFF Discussion Papers 0404, Centre for Research into Industry, Enterprise, Finance and the Firm. [Downloadable!]
- Pedro S. Martins & Jim Jin, 2008. "Firm-Level Social Returns to Education," Working Papers 9, Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research. [Downloadable!]
Diaz-Serrano, Luis & Hartog, Joop & Nielsen, Helena Skyt, 2003. "Compensating Wage Differentials for Schooling Risk in Denmark," IZA Discussion Papers 963, Institute for the Study of Labor (IZA). [Downloadable!]
Other versions:
- Diaz-Serrano, L. & Hartog, J. & Skyt Nielsen, H., 2003. "Compensating Wage Differentials for Schooling Risk in Denmark," Economics, Finance and Accounting Department Working Paper Series n1271003, Department of Economics, Finance and Accounting, National University of Ireland - Maynooth. [Downloadable!]
Joop Hartog & Luis Diaz-Serrano, 2004. "Earnings Risk And Demand For Higher Education: A Cross-Section Test For Spain," Economics, Finance and Accounting Department Working Paper Series n1370804, Department of Economics, Finance and Accounting, National University of Ireland - Maynooth. [Downloadable!]
Diaz-Serrano, Luis & Hartog, Joop, 2004. "Is There a Risk-Return Trade-Off across Occupations? Evidence from Spain," IZA Discussion Papers 1355, Institute for the Study of Labor (IZA). [Downloadable!]
Migali, Giuseppe, 2006. "Funding Higher Education and Wage Uncertainty : Income Contingent Loan versus Mortgage Loan," The Warwick Economics Research Paper Series (TWERPS) 775, University of Warwick, Department of Economics. [Downloadable!]
Other versions:
- Migali, Giuseppe, 2006. "Funding Higher Education and Wage Uncertainty: Income Contingent Loan Versus Mortgate Loan," The Warwick Economics Research Paper Series (TWERPS) 740, University of Warwick, Department of Economics. [Downloadable!]
Corrado Andini & Pedro Telhado Pereira, 2007. "Full-time Schooling, Part-time Schooling, and Wages: Returns and Risks in Portugal," IZA Discussion Papers 2651, Institute for the Study of Labor (IZA). [Downloadable!]
Christiansen, Charlotte & Nielsen, Helena Skyt, 2003. "The Educational Asset Market: A Finance Perspective on Human Capital Investment," Finance Working Papers 02-9, University of Aarhus, Aarhus School of Business, Department of Business Studies. [Downloadable!]
Other versions:
- Christiansen, Charlotte & Nielsen, Helena Skyt, 2002. "The Educational Asset Market: A Finance Perspective on Human Capital Investment," Working Papers 02-10, University of Aarhus, Aarhus School of Business, Department of Economics. [Downloadable!]
Bas Jacobs, 2007. "Real Options and Human Capital Investment," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
Vincent Hogan & Roberto Rigobon, 2002. "Using Heteroscedasticity to Estimate the Returns to Education," NBER Working Papers 9145, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)

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