Early subjective completion beliefs and the demand for post-secondary education

Johannes Kunz and Kevin Staub

Journal of Economic Behavior & Organization, 2020, vol. 177, issue C, 34-55

Abstract: We provide a comprehensive empirical analysis on the role of beliefs about the probability of completing post-secondary education, elicited before the end of secondary school, for students’ future education choices. Although there is substantial evidence on the relevance of subjective beliefs for returns to post-secondary education conditional on completion, there is little evidence linking early beliefs to the extensive margin of completing a degree. We exploit (i) a representative population sample which (ii) follows students over a long time horizon, two key features largely absent from the previous literature on subjective beliefs. We find that completion beliefs are mainly related to cognitive and non-cognitive skills, as opposed to family background or opportunities in the local labor market. Completion beliefs elicited before the end of secondary school are highly predictive for later key education outcomes, with a predictive accuracy comparable to an econometric model with perfect foresight. Assessing the heterogeneity of the relationship, our results imply that beliefs are most important for lower ability students and in times of tougher local labor markets.

Keywords: Subjective beliefs; Subjective probabilities; Completion uncertainty; Post-secondary education; Human capital investment (search for similar items in EconPapers)
JEL-codes: I21 I26 J24 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0167268120301682
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:177:y:2020:i:c:p:34-55

DOI: 10.1016/j.jebo.2020.05.015

Access Statistics for this article

Journal of Economic Behavior & Organization is currently edited by Houser, D. and Puzzello, D.

More articles in Journal of Economic Behavior & Organization from Elsevier
Bibliographic data for series maintained by Catherine Liu ().