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Present Bias and Underinvestment in Education? Long-run Effects of Childhood Exposure to Booms in Colombia

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  • Carrillo, Bladimir

Abstract

This paper examines the long-run impacts of income shocks by exploiting variation in coffee cultivation patterns within Colombia and world coffee prices during cohorts' school-going years in a differences-in-differences framework. The results indicate that cohorts who faced higher returns to coffee-related work during school-going years completed fewer years of schooling and have lower income in adulthood. These findings suggest that leaving school during temporary booms results in a significant loss of long-term income. This is consistent with the possibility that students may ignore or heavily discount the future consequences of dropout decisions when faced with immediate income gains.

Suggested Citation

  • Carrillo, Bladimir, 2019. "Present Bias and Underinvestment in Education? Long-run Effects of Childhood Exposure to Booms in Colombia," ETA: Economic Theory and Applications 288455, Fondazione Eni Enrico Mattei (FEEM).
  • Handle: RePEc:ags:feemth:288455
    DOI: 10.22004/ag.econ.288455
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    Cited by:

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    4. Kebede,Hundanol Atnafu, 2021. "The Pass-Through of International Commodity Price Shocks to Producers’ Welfare : Evidence from EthiopianCoffee Farmers," Policy Research Working Paper Series 9839, The World Bank.
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    6. Thiago Scarelli & David Margolis, 2021. "When You Can't Afford to Wait for a Job: The Role of Time Discounting for Own-Account Workers in Developing Countries," PSE Working Papers halshs-03288728, HAL.
    7. Xu, Huayu, 2021. "The long-term health and economic consequences of improved property rights," Journal of Public Economics, Elsevier, vol. 201(C).

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    Keywords

    Research Methods/ Statistical Methods;

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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