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Title:Stay in school or start working? : the human capital investment decision under uncertainty and irreversibility PDF Logo
Authors:Bilkic, Natasa
Gries, Thomas
Pilichowski, Margarethe
Issue Date:2009
Series/Report no.:CESifo working paper 2825
Abstract:As the time of leaving school determines the level of academic achievement this timing decision is central for the human capital investment decision. Real option theory offers a new perspective of the human capital investment decision under uncertainty and irreversibility. Unlike other approaches we include accumulative schooling costs, and provide a full analytical discussion of all determinants of the decision to terminate education and enter the labor market. Further, as we are able to look at a sequence of formal qualification levels, each characterized by various cost and income profiles we can discuss discontinuities and sheepskin effects within this approach.
Subjects:human capital theory
uncertainty
irreversibility
JEL:J24
D81
I20
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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