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Study-Work Trade-off in Contests With Capacity-Constrained Students

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  • Altunina Anastasiia

    (National Research University Higher School of Economics)

Abstract

The choice of education and career trajectory plays a crucial role in student behavior and labor market outcomes. This paper investigates how students allocate limited time across academic activities and gaining work experience. We show that in a setting in which student types (or abilities) constitute private information, there are pooling and separating equilibria, which are sustained under a certain state of the job market. Our theoretical model shows how each student’s choice between working and studying depends on the contract, and students’ abilities and expectations about the benefits of a master’s degree. To test the main predictions of the model, we conduct a survey of 122 HSE University economics students, who were completing their bachelor’s degree in 2022. Our empirical findings partially confirm what the theory predicts. We also provide possible explanations for the effects that are not in line with our model but observed among the students.

Suggested Citation

  • Altunina Anastasiia, 2022. "Study-Work Trade-off in Contests With Capacity-Constrained Students," HSE Working papers WP BRP 259/EC/2022, National Research University Higher School of Economics.
    • Handle: RePEc:hig:wpaper:259/ec/2022
    as

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    File URL: https://wp.hse.ru/data/2022/12/27/1717667503/259EC2022.pdf
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    References listed on IDEAS

    as
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    2. Triventi, Moris, 2014. "Does working during higher education affect students’ academic progression?," Economics of Education Review, Elsevier, vol. 41(C), pages 1-13.
    3. O'Leary, Nigel C. & Sloane, Peter J., 2005. "The Return to a University Education in Great Britain," National Institute Economic Review, National Institute of Economic and Social Research, vol. 193, pages 75-89, July.
    4. In-Koo Cho & David M. Kreps, 1987. "Signaling Games and Stable Equilibria," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 102(2), pages 179-221.
    5. Sheetal Sekhri, 2020. "Prestige Matters: Wage Premium and Value Addition in Elite Colleges," American Economic Journal: Applied Economics, American Economic Association, vol. 12(3), pages 207-225, July.
    6. Claire Célérier & Boris Vallée, 2019. "Returns to Talent and the Finance Wage Premium," The Review of Financial Studies, Society for Financial Studies, vol. 32(10), pages 4005-4040.
    7. Michael Spence, 1973. "Job Market Signaling," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 87(3), pages 355-374.
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    More about this item

    Keywords

    contest theory; signaling; contract theory; education trajectories;
    All these keywords.

    JEL classification:

    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education

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