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Young, Gifted and Lazy? The Role of Ability and Labor Market Prospects in Student Effort Decisions

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  • Adrian Chadi

    () (Institute for Labour Law and Industrial Relations in the European Union (IAAEU))

  • Marco de Pinto

    () (Institute for Labour Law and Industrial Relations in the European Union (IAAEU))

  • Gabriel Schultze

    () (Institute for Labour Law and Industrial Relations in the European Union (IAAEU))

Abstract

This paper examines the decision-making process of students from an economic perspective in order to understand what determines an in- dividual’s willingness to provide effort. Our theoretical model predicts that ability and job market prospects are positive determinants. Ana- lyzing a novel dataset on thousands of German students, however, we instead find that ability has a significantly negative effect on effort. It seems that the marginal gain of increasing effort in terms of higher ex- pected income after studying is lower for high-ability students compared to low-ability students. In regard to the second determinant, the evi- dence rejects a similar argument, according to which great job market prospects may impair student effort. Applying an instrumental vari- able approach based on official unemployment data on regional labor markets, we can confirm our prediction on the positive role of perceived employment prospects in actual student behavior.

Suggested Citation

  • Adrian Chadi & Marco de Pinto & Gabriel Schultze, 2017. "Young, Gifted and Lazy? The Role of Ability and Labor Market Prospects in Student Effort Decisions," IAAEU Discussion Papers 201705, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
  • Handle: RePEc:iaa:dpaper:201705
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    More about this item

    Keywords

    higher education; effort; study time; leisure; ability; labor market data;

    JEL classification:

    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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