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Risk-Return Trade-Offs to Complete Educational Paths: Vocational, Academic and Mixed

  • Simone Tuor

    ()

    (Institute for Strategy and Business Economics, University of Zurich)

  • Uschi Backes-Gellner

    ()

    (Institute for Strategy and Business Economics, University of Zurich)

This paper investigates the rates of return and the risks of different types of educational paths after compulsory education. We distinguish a purely academic educational path from a purely vocational path and a mixed path with loops through both systems. To study the labor market outcome we compare earnings and calculate net return rates as well as risk measures to investigate whether different educational paths are characterized by different risk-return trade-offs. We use Lazear’s jack-of-all-trades theory on entrepreneurship to derive testable predictions about the labour market outcome of different combinations of education for entrepreneurs and employees. Our empirical results are based on the Swiss Labor Force Survey (SLFS) and demonstrate that mixed educational paths are well rewarded in the labor market. However, a high return is also associated with a high income variance which is driven by those who end up as entrepreneurs.

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File URL: http://repec.business.uzh.ch/RePEc/iso/leadinghouse/0031_lhwpaper.pdf
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Paper provided by University of Zurich, Institute for Strategy and Business Economics (ISU) in its series Economics of Education Working Paper Series with number 0031.

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Length: 32 pages
Date of creation: Jun 2008
Date of revision:
Publication status: published
Handle: RePEc:iso:educat:0031
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