We propose a simple investment model which shows that, in the presence of fluctuations in and uncertainty about the opportunity cost of time, marginal individuals may choose to delay their education if the opportunity cost of time is temporarily high. Importantly, it is when the completion of the degree is uncertain, but likely enough that individuals will consider delaying their education. As a result, when returns to education are relatively low, education and timing of education will be sensitive to fluctuations in the opportunity cost of time. If return is high, delay is never optimal. These findings are supported by Swedish university enrolment patterns, and cross-country evidence on age of university freshmen.
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Paper provided by Research Institute of Industrial Economics in its series Working Paper Series with number
614.
Length: 16 pages Date of creation: 16 Mar 2004 Date of revision: Handle: RePEc:hhs:iuiwop:0614
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Find related papers by JEL classification: D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
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Saez-Marti, Maria & Sjögren, Anna, 2004.
"Deadlines and Distractions,"
Working Paper Series
618, Research Institute of Industrial Economics, revised 01 Jul 2004.
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