Earnings Risk and Demand for Higher Education: A Cross-Section Test for Spain

Joop Hartog and Luis Diaz-Serrano ()

No 641, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We develop a simple human capital model for optimum schooling length when earnings are stochastic, and highlight the pivotal role of risk attitudes and the schooling gradient of earnings risk. We use Spanish data to document the gradient and to estimate individual response to earnings risk in deciding on attending university education, by measuring risk as the residual variance in regional earnings functions. We find that the basic response is negative but that in households with lower risk aversion, the response may be reversed to positive.

Keywords: Spain; earnings risk; human capital; education (search for similar items in EconPapers)
JEL-codes: I21 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2002-11
New Economics Papers: this item is included in nep-rmg
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Citations: View citations in EconPapers (10)

Published - published in: Journal of Applied Economics, 2007, 10 (1) , 1-28

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Related works:
Journal Article: Earnings risk and demand for higher education: A cross-section test for Spain (2007)
Working Paper: EARNINGS RISK AND DEMAND FOR HIGHER EDUCATION: A CROSS-SECTION TEST FOR SPAIN (2004)
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