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Dropping out and revising educational decisions: Evidence from vocational education

Donata Bessey () and Uschi Backes-Gellner

No 40, Economics of Education Working Paper Series from University of Zurich, Department of Business Administration (IBW)

Abstract: Previous research on educational decisions has almost exclusively focused on individual decisions to start a particular education. At the same time, the decision to revise an educational choice has hardly been analyzed, unless it is the decision to drop out. However, dropping out is only one possibility of revising an educational choice. In this paper, we distinguish three different educational revisions, namely, dropping out, changing and upgrading. We analyze the determinants of these three different choices in apprenticeship training using hazard rate models for the empirical analysis. In a first research step, we carry out a simple hazard rate estimation of the decision to drop out vs. staying in the educational system because dropping out is associated with considerable risks, unlike the other two choices. Our most important finding here is that dropout decisions seem to be driven to a considerable amount by financial considerations such as the opportunity cost of apprenticeship training or financial distress, determinants that could rarely be analyzed in previous research due to lack of information. In a competing risks specification of the different educational choices, we find additional regional-level impact factors and remarkable differences in the determinants of the different choices. Less favorable local labor market conditions lead to lower hazards of staying within the educational system. These results underline the importance of distinguishing between the different choices instead of focusing exclusively on dropping out as one possible choice.

Keywords: Apprenticeship training; human capital; regional labor markets (search for similar items in EconPapers)
JEL-codes: I21 J24 J32 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2008-12
New Economics Papers: this item is included in nep-edu, nep-hrm and nep-lab
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