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Earnings Risk and Demand for Higher Education

Author

Listed:
  • Joop Hartog

    (Faculty of Economics and Econometrics, University of Amsterdam)

  • Luis Diaz Serrano

    (University of Barcelona)

Abstract

We develop a simple human capital model for optimum schooling length when earnings are stochastic, and highlight the pivotal role of risk attitudes and the schooling gradient of earnings risk. We use Spanish data to document the gradient and to estimate individual response to earnings risk in deciding on attending university education, by measuring risk as the residual variance in regional earnings functions. We find that the basic response is negative but that in households with lower risk aversion, the response may be reversed to positive. See also the publication in the Journal of Applied Economics , X(1), 1-28.

Suggested Citation

  • Joop Hartog & Luis Diaz Serrano, 2002. "Earnings Risk and Demand for Higher Education," Tinbergen Institute Discussion Papers 02-122/3, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20020122
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    File URL: https://papers.tinbergen.nl/02122.pdf
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    Cited by:

    1. Carla Sá & Raymond Florax & Piet Rietveld, 2006. "Does Accessibility to Higher Education Matter? Choice Behaviour of High School Graduates in the Netherlands," Spatial Economic Analysis, Taylor & Francis Journals, vol. 1(2), pages 155-174.

    More about this item

    Keywords

    Earnings Risk; Schooling Decisions;

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education

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