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The Wage Expectations of European College Students

  • Brunello, Giorgio
  • Lucifora, Claudio
  • Winter-Ebmer, Rudolf

Expected earnings and expected returns to education are seen by labour economists as a major determinant of educational attainment. In spite of this, the empirical knowledge about expectations and their formation is scarce. In this Paper we report the results of the first systematic study of the wage expectations of European college students. Our data are based on the replies to the same questionnaire by more than 6000 college students all over Europe. We study the determinants of wage expectations and expected employment probabilities, the variability of these expectations within a field of study and their variation across universities and fields. We also examine the trade-off between expected starting wages and wage growth. In the final section of the paper, we contrast expected returns to education with actual returns estimated from country-specific microdata. In line with US studies we find that students overestimate returns to education.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 2817.

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Date of creation: May 2001
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Handle: RePEc:cpr:ceprdp:2817
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  1. Charles F. Manski, 1993. "Adolescent Econometricians: How Do Youth Infer the Returns to Schooling?," NBER Chapters, in: Studies of Supply and Demand in Higher Education, pages 43-60 National Bureau of Economic Research, Inc.
  2. Charles T. Clotfelter & Michael Rothschild, 1993. "Studies of Supply and Demand in Higher Education," NBER Books, National Bureau of Economic Research, Inc, number clot93-1, October.
  3. Jonathan S. Leonard, 1980. "Wage Expectations in the Labor Market: Survey Evidence on Rationality," NBER Working Papers 0440, National Bureau of Economic Research, Inc.
  4. Daron Acemoglu, 2002. "Technical Change, Inequality, and the Labor Market," Journal of Economic Literature, American Economic Association, vol. 40(1), pages 7-72, March.
  5. Jeff Dominitz & Charles F. Manski, 1994. "Eliciting Student Expectations Of The Returns To Schooling," Econometrics 9411002, EconWPA.
  6. Winter-Ebmer, Rudolf & Wirz, Aniela, 2002. "Public Funding and Enrolment into Higher Education in Europe," IZA Discussion Papers 503, Institute for the Study of Labor (IZA).
  7. Eli Berman & John Bound & Zvi Griliches, 1993. "Changes in the Demand for Skilled Labor within U.S. Manufacturing Industries: Evidence from the Annual Survey of Manufacturing," NBER Working Papers 4255, National Bureau of Economic Research, Inc.
  8. Betts, Julian R, 1998. "The Impact of Educational Standards on the Level and Distribution of Earnings," American Economic Review, American Economic Association, vol. 88(1), pages 266-75, March.
  9. Francine D. Blau & Marianne A. Ferber, 1991. "Career Plans and Expectations of Young Women and Men: The Earnings Gap and Labor Force Participation," Journal of Human Resources, University of Wisconsin Press, vol. 26(4), pages 581-607.
  10. Julian R. Betts, 1996. "What Do Students Know about Wages? Evidence from a Survey of Undergraduates," Journal of Human Resources, University of Wisconsin Press, vol. 31(1), pages 27-56.
  11. Nickell, Stephen, 1979. "Education and Lifetime Patterns of Unemployment," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages S117-31, October.
  12. Altonji, Joseph G, 1993. "The Demand for and Return to Education When Education Outcomes Are Uncertain," Journal of Labor Economics, University of Chicago Press, vol. 11(1), pages 48-83, January.
  13. Nickell, Stephen & Bell, Brian, 1995. "The Collapse in Demand for the Unskilled and Unemployment across the OECD," Oxford Review of Economic Policy, Oxford University Press, vol. 11(1), pages 40-62, Spring.
  14. Carvajal, Manuel J. & Bendana, David & Bozorgmanesh, Alireza & Castillo, Miguel A. & Pourmasiha, Katayoun & Rao, Priya & Torres, Juan A., 2000. "Inter-gender differentials between college students' earnings expectations and the experience of recent graduates," Economics of Education Review, Elsevier, vol. 19(3), pages 229-243, June.
  15. Moulton, Brent R, 1990. "An Illustration of a Pitfall in Estimating the Effects of Aggregate Variables on Micro Unit," The Review of Economics and Statistics, MIT Press, vol. 72(2), pages 334-38, May.
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