Sequential Choices, Option Values, and the Returns to Education

Manudeep Bhuller, Philipp Eisenhauer and Moritz Mendel

Papers from arXiv.org

Abstract: Using detailed Norwegian data on earnings, education and work histories, we estimate a dynamic structural model of education and sector choices that captures rich life-cycle patterns by ability. We validate the model against variation in education choices induced by a compulsory schooling reform. Our approach allows us to estimate the ex-ante returns to different education tracks across the life-cycle by individual ability and quantify the contribution of option values. We find substantial heterogeneity in returns and establish crucial roles for option values and re-enrollment in determining education choices and the impact of schooling policies.

Date: 2022-05, Revised 2024-07
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Citations: View citations in EconPapers (7)

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Working Paper: Sequential Choices, Option Values, and the Returns to Education (2024)
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