Template-Type: ReDIF-Paper 1.0 Series: Tinbergen Institute Discussion Papers Creation-Date: 2002-12-18 Number: 02-122/3 Author-Name: Joop Hartog Author-Email: j.hartog@uva.nl Author-Workplace-Name: Faculty of Economics and Econometrics, University of Amsterdam Author-Name: Luis Diaz Serrano Author-Email: luis.diaz@menta.net Author-Workplace-Name: University of Barcelona Title: Earnings Risk and Demand for Higher Education Abstract: We develop a simple human capital model for optimum schooling length when earnings are stochastic, and highlight the pivotal role of risk attitudes and the schooling gradient of earnings risk. We use Spanish data to document the gradient and to estimate individual response to earnings risk in deciding on attending university education, by measuring risk as the residual variance in regional earnings functions. We find that the basic response is negative but that in households with lower risk aversion, the response may be reversed to positive.

See also the publication in the Journal of Applied Economics, X(1), 1-28. Classification-JEL: I21 Keywords: Earnings Risk; Schooling Decisions File-Url: https://papers.tinbergen.nl/02122.pdf File-Format: application/pdf File-Size: 81328 bytes Handle: RePEc:tin:wpaper:20020122