 University dropout problems and solutionsJournal of Economics, 2023, vol. 138, issue 3, No 2, 248 pages Abstract: Abstract High dropout rates are often thought to signal inefficient education, but students can drop out of optional higher education only if they previously chose to enroll. This paper shows that dropout is more likely when higher uncertainty increases the probability of news that offset an expectation at enrollment that completion would be better than drop out. Higher uncertainty also increases the value of the option to drop out, so opportunities to enroll and possibly drop out are more valuable ex ante and average educational outcomes are better ex post for degree programs and groups of students with higher uncertainty and efficiently more frequent dropout. Poor information at enrolment, liquidity constraints, and other imperfections can also explain high dropout rates, but attempts to remedy dropout symptoms rather than their underlying causes can introduce new inefficiencies. Keywords: Option value; Higher education dropout; Limited information; Rational choice (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:kap:jeczfn:v:138:y:2023:i:3:d:10.1007_s00712-022-00814-7 DOI: 10.1007/s00712-022-00814-7 Access Statistics for this article Journal of Economics is currently edited by Giacomo Corneo More articles in Journal of Economics from Springer |
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