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Locus of control and Human Capital Investment Decisions: The Role of Effort, Parental Preferences and Financial Constraints

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  • Szabó-Morvai Ágnes

    (KRTK-KTI, 1097 Budapest, Tóth Kálmán u. 4.és Debreceni Egyetem, 4032 Debrecen, Böszörményi út 138.)

  • Hubert János Kiss

    (KRTK KTI, 1097 Budapest, Tóth Kálmán u. 4, Magyarország. andBudapesti Corvinus Egyetem, 1093 Budapest, Fővám tér 8, Magyarország.)

Abstract

We study the relationship between locus of control (LoC) and human capital investment decisions in the adolescence, using PDS lasso to exploit high-dimensional data. While LoC is not significantly associated with graduation from high school once we use exogenous controls, it correlates strongly with dropout age and college attendance even if we take into account predetermined variables and cognitive abilities, and it exhibits a significant positive relationship with plans to apply to college even if we control for potentially endogenous variables. We find that effort is an important conduit through which LoC operates and it is different from the expectation channel that has been already documented in the literature. The associations are heterogenous: LoC has a significant association with dropout age, high school graduation and college application plans in low-SES families, and with college attendance in mid-SES families. These heterogenous relations are in a large part determined by parental preferences and financial constraints.

Suggested Citation

  • Szabó-Morvai Ágnes & Hubert János Kiss, 2020. "Locus of control and Human Capital Investment Decisions: The Role of Effort, Parental Preferences and Financial Constraints," CERS-IE WORKING PAPERS 2055, Institute of Economics, Centre for Economic and Regional Studies.
    • Handle: RePEc:has:discpr:2055
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    Cited by:

    1. Szabó-Morvai, Ágnes & Kiss, Hubert János, 2022. "Különböznek-e a roma és nem roma diákok nem kognitív képességeikben? [Do Roma and non-Roma students differ in their non-cognitive abilities?]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(11), pages 1433-1456.
    2. Szabó-Morvai, Ágnes & Kiss, Hubert János & Károlyi, Róbert, 2023. "Kontrollhely Magyarországon - egy reprezentatív felmérés eredményei [Locus of Control in Hungary: The results of a representative survey]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(7), pages 847-871.

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    More about this item

    Keywords

    Human Capital Investment Decision; LoC; Machine learning; PDS Lasso;
    All these keywords.

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education

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