Early subjective completion beliefs and the demand for post-secondary education
Author
Kunz, JS; Staub, KEDate
2020-09Source Title
Journal of Economic Behavior and OrganizationPublisher
ElsevierUniversity of Melbourne Author/s
Staub, KevinAffiliation
EconomicsMetadata
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Journal ArticleCitations
Kunz, J. S. & Staub, K. E. (2020). Early subjective completion beliefs and the demand for post-secondary education. Journal of Economic Behavior and Organization, 177, pp.34-55. https://doi.org/10.1016/j.jebo.2020.05.015.Access Status
This item is embargoed and will be available on 2023-09-01ARC Grant code
ARC/DE170100644Abstract
We provide a comprehensive empirical analysis on the role of beliefs about the probability of completing post-secondary education, elicited before the end of secondary school, for students’ future education choices. Although there is substantial evidence on the relevance of subjective beliefs for returns to post-secondary education conditional on completion, there is little evidence linking early beliefs to the extensive margin of completing a degree. We exploit (i) a representative population sample which (ii) follows students over a long time horizon, two key features largely absent from the previous literature on subjective beliefs. We find that completion beliefs are mainly related to cognitive and non-cognitive skills, as opposed to family background or opportunities in the local labor market. Completion beliefs elicited before the end of secondary school are highly predictive for later key education outcomes, with a predictive accuracy comparable to an econometric model with perfect foresight. Assessing the heterogeneity of the relationship, our results imply that beliefs are most important for lower ability students and in times of tougher local labor markets.
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