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

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  • Bladimir Carrillo

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

  • Bladimir Carrillo, 2019. "Present Bias and Underinvestment in Education? Long-run Effects of Childhood Exposure to Booms in Colombia," Documentos de Trabajo 17219, The Latin American and Caribbean Economic Association (LACEA).
    • Handle: RePEc:col:000518:017219
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    2. Carvajal, Hernán, 2023. "Efectos de la suspensión de las aspersiones aéreas con glifosato sobre la deserción escolar en Colombia," Documentos CEDE 20307, Universidad de los Andes, Facultad de Economía, CEDE.
    3. Diaz Gutierrez, Julian, 2023. "Trade Effects on Substance Abuse: Evidence from Colombia's Liberalization," 2023 Annual Meeting, July 23-25, Washington D.C. 335460, Agricultural and Applied Economics Association.
    4. Johan Hombert & Adrien Matray, 2019. "Technology Boom, Labor Reallocation, and Human Capital Depreciation," Working Papers 260, Princeton University, Department of Economics, Center for Economic Policy Studies..
    5. Habtamu Ali Beshir & Jean-François Maystadt, 2022. "Price shocks and human capital: Timing matters," LIDAM Discussion Papers IRES 2022020, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    6. Thiago Scarelli & David N Margolis, 2022. "When You Can't Afford to Wait for a Job: The Role of Time Discounting for Own-Account Workers in Developing Countries," 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).
    8. Bourassa-Viau, Simon & Garon, Jean-Denis & Haeck, Catherine, 2022. "Educational choices and labour market outcomes in times of crisis," Economics of Education Review, Elsevier, vol. 88(C).
    9. 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.
    10. Patrick Bennett, 2021. "The Work-To-School Transitions:Job Displacement and Skill Upgrading among Young High School Dropouts," Working Papers 202205, University of Liverpool, Department of Economics.

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    More about this item

    Keywords

    Coffee price shocks; transitory income shocks; human capital accumulation; opportunitycost of schooling; long-run impacts; schooling.;
    All these keywords.

    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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