Subjective Completion Beliefs and the Demand for Post-Secondary Education

No 10344, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: The outcome of pursuing an upper or post-secondary education degree is uncertain. A student might not complete a chosen degree for a number of reasons, such as insufficient academic preparation or financial constraints. Thus, when considering whether to invest in post-secondary education, students must factor their probability of completing the degree into their decision. We study the role of this uncertainty in education choices using representative survey data from Germany. Students' subjective beliefs about the probability of completing a post-secondary education were elicited prior to them finishing their secondary education. We relate these subjective completion probabilities to students' subsequent education choices and outcomes. We find that these early beliefs are predictive of intentions to invest in education, actual subsequent investments in education, and degree completion. A structural choice model of sequential investment further reveals that the association between completion beliefs and investment choices is strongest for students with low academic skills and low preferences for post-secondary education.

Keywords: human capital investment; post-secondary education; completion uncertainty; subjective probabilities; subjective beliefs (search for similar items in EconPapers)
JEL-codes: I21 I26 J24 (search for similar items in EconPapers)
Pages: 49 pages
Date: 2016-11
New Economics Papers: this item is included in nep-edu and nep-eur
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Citations: View citations in EconPapers (6)

Published - published as 'Early subjective completion beliefs and the demand for post-secondary education' in: Journal of Economic Behavior & Organization, 2020, 177, 34-55

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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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