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

Listed author(s):
  • 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))

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.

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Paper provided by Institute of Labour Law and Industrial Relations in the European Union (IAAEU) in its series IAAEU Discussion Papers with number 201705.

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Date of creation: May 2017
Handle: RePEc:iaa:dpaper:201705
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