Stay in School or Start Working? - The Human Capital Investment Decision under Uncertainty and Irreversibility

Natasa Bilkic, Thomas Gries and Margarethe Pilichowski

No 2825, CESifo Working Paper Series from CESifo

Abstract: As the time of leaving school determines the level of academic achievement this timing decision is central for the human capital investment decision. Real option theory offers a new perspective of the human capital investment decision under uncertainty and irreversibility. Unlike other approaches we include accumulative schooling costs, and provide a full analytical discussion of all determinants of the decision to terminate education and enter the labor market. Further, as we are able to look at a sequence of formal qualification levels, each characterized by various cost and income profiles we can discuss discontinuities and sheepskin effects within this approach.

Keywords: human capital theory; uncertainty; irreversibility (search for similar items in EconPapers)
JEL-codes: D81 I20 J24 (search for similar items in EconPapers)
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.cesifo.org/DocDL/cesifo1_wp2825.pdf (application/pdf)

Related works:
Journal Article: Stay in school or start working? — The human capital investment decision under uncertainty and irreversibility (2012)
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:ces:ceswps:_2825

Access Statistics for this paper

More papers in CESifo Working Paper Series from CESifo Contact information at EDIRC.
Bibliographic data for series maintained by Klaus Wohlrabe ().