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Student earnings expectations: Heterogeneity or noise?

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  • Díaz Serrano, Lluís
  • Hartog, Joop
  • Nilsson, William
  • Ophem, Hans van
  • Yang, Po

Abstract

Students’ choices in education can only be based on expected outcomes. Econometric models that infer expectations based on ex post outcomes impose a rational structure of expectations on school performance and post-graduation earnings. Direct surveys suggest much ignorance and fuzziness. We use survey data on expectations in four universities in three countries and check for relations of expected probability to graduate and of expected earnings with personal abilities and attitudes. We find that most of the difference in expectations among individuals is just noise. Keywords: Student expectations; earnings; earnings dispersion; risk attitudes. JEL Codes: I21; I26; J24; D83

Suggested Citation

  • Díaz Serrano, Lluís & Hartog, Joop & Nilsson, William & Ophem, Hans van & Yang, Po, 2016. "Student earnings expectations: Heterogeneity or noise?," Working Papers 2072/267265, Universitat Rovira i Virgili, Department of Economics.
    • Handle: RePEc:urv:wpaper:2072/267265
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    References listed on IDEAS

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    1. Flavio Cunha & James Heckman & Salvador Navarro, 2005. "Separating uncertainty from heterogeneity in life cycle earnings," Oxford Economic Papers, Oxford University Press, vol. 57(2), pages 191-261, April.
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    3. Hartog, Joop, 2001. "On Human Capital and Individual Capabilities," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 47(4), pages 515-540, December.
    4. James J. Heckman & Jora Stixrud & Sergio Urzua, 2006. "The Effects of Cognitive and Noncognitive Abilities on Labor Market Outcomes and Social Behavior," Journal of Labor Economics, University of Chicago Press, vol. 24(3), pages 411-482, July.
    5. Basit Zafar, 2011. "How Do College Students Form Expectations?," Journal of Labor Economics, University of Chicago Press, vol. 29(2), pages 301-348.
    6. Joop Hartog & Hans Van Ophem & Simona Maria Bajdechi, 2007. "Simulating the Risk of Investment in Human Capital," Education Economics, Taylor & Francis Journals, vol. 15(3), pages 259-275.
    7. Joop Hartog, 2001. "On Human Capital and Individual Capabilities," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 47(4), pages 515-540, December.
    8. Webbink, Dinand & Hartog, Joop, 2004. "Can students predict starting salaries? Yes!," Economics of Education Review, Elsevier, vol. 23(2), pages 103-113, April.
    9. Guiso, Luigi & Jappelli, Tullio & Pistaferri, Luigi, 2002. "An Empirical Analysis of Earnings and Employment Risk," Journal of Business & Economic Statistics, American Statistical Association, vol. 20(2), pages 241-253, April.
    10. Robert Jensen, 2010. "The (Perceived) Returns to Education and the Demand for Schooling," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 125(2), pages 515-548.
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    Cited by:

    1. Vaishali Zambre, 2018. "The Gender Gap in Wage Expectations: Do Young Women Trade off Higher Wages for Lower Wage Risk?," Discussion Papers of DIW Berlin 1742, DIW Berlin, German Institute for Economic Research.
    2. Pamela Giustinelli, 2022. "Expectations in Education: Framework, Elicitation, and Evidence," Working Papers 2022-026, Human Capital and Economic Opportunity Working Group.

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    More about this item

    Keywords

    Educació -- Models matemàtics; Orientació professional; 331 - Treball. Relacions laborals. Ocupació. Organització del treball; 37 - Educació. Ensenyament. Formació. Temps lliure;
    All these keywords.

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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