Subjective completion beliefs and the demand for post-secondary education

Johannes Kunz and Kevin Staub

No 218, ECON - Working Papers from Department of Economics - University of Zurich

Abstract: The outcome of pursuing a post-secondary educational degree is uncertain. A student might not complete a chosen degree for a number of reasons, such as academic insufficiency or financial constraints. Thus, when considering whether to invest in post-secondary education, students must factor in their completion probability into their decision. We study the role of this uncertainty in educational choices using students’ subjective beliefs about completing a post-secondary education, which were elicited prior to students’ completing secondary education. We relate these subjective completion probabilities to their subsequent educational choices and outcomes using representative survey data from Germany. Following the students over time, we find that the initial beliefs are predictive of intentions to invest in education, actual subsequent educational investments, and degree completion. We assess the heterogeneity of the impact across different educational paths. After controlling for academic ability, we find that subjective beliefs are most relevant in choosing a vocational education. In addition to reduced form models, we estimate a structural choice model of sequential investment in education that allows for unobserved tastes and preferences for education and forward-looking behavior. The results confirm the influence of subjective completion beliefs on choosing a post-secondary education.

Keywords: Subjective beliefs; educational completion uncertainty; human capital investment (search for similar items in EconPapers)
JEL-codes: I21 I26 J24 (search for similar items in EconPapers)
Date: 2016-02
New Economics Papers: this item is included in nep-edu, nep-eur and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Related works:
Working Paper: Subjective Completion Beliefs and the Demand for Post-Secondary Education (2016)
Working Paper: Subjective completion beliefs and the demand for post-secondary education (2016)
Working Paper: Subjective Completion Beliefs and the Demand for Post-Secondary Education (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:zur:econwp:218

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