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Is there a Return-Risk Link in Education?

Author

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  • Pereira, Pedro T.

    () (University of Madeira)

  • Martins, Pedro S.

    () (Queen Mary, University of London)

Abstract

Risk averse investors have to be compensated in higher expected returns when facing investments with higher risk. Education is an important investment therefore we use the results for 16 countries to test the positive relationship between return to education and the risk involved in this investment. It seems that most of the countries fit the pattern well: higher risk - higher return.

Suggested Citation

  • Pereira, Pedro T. & Martins, Pedro S., 2001. "Is there a Return-Risk Link in Education?," IZA Discussion Papers 321, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp321
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    References listed on IDEAS

    as
    1. Pedro Telhado Pereira & Pedro Silva Martins, 2000. "Does education reduce wage inequality? Quantile regressions evidence from fifteen European countries," FEUNL Working Paper Series wp379, Universidade Nova de Lisboa, Faculdade de Economia.
    2. Card, David, 1999. "The causal effect of education on earnings," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 30, pages 1801-1863, Elsevier.
    3. Harry Markowitz, 1952. "Portfolio Selection," Journal of Finance, American Finance Association, vol. 7(1), pages 77-91, March.
    4. Koenker, Roger W & Bassett, Gilbert, Jr, 1978. "Regression Quantiles," Econometrica, Econometric Society, vol. 46(1), pages 33-50, January.
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    More about this item

    Keywords

    quantile regression; risk; Returns to education;
    All these keywords.

    JEL classification:

    • C29 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Other
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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