Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/174986
Authors: 
Backes-Gellner, Uschi
Herz, Holger
Kosfeld, Michael
Oswald, Yvonne
Year of Publication: 
2018
Series/Report no.: 
CESifo Working Paper 6863
Abstract: 
Evidence suggests that acquiring human capital is related to better life outcomes, yet young peoples’ decisions to invest in or stop acquiring human capital are still poorly understood. We investigate the role of time and reference-dependent preferences in such decisions. Using a data set that is unique in its combination of real-world observations on student outcomes and experimental data on economic preferences, we find that a low degree of long-run patience is a key determinant of dropping out of upper-secondary education. Further, for students who finish education we show that one month before termination of their program, present-biased students are less likely to have concrete continuation plans while loss averse students are more likely to have a definite job offer already. Our findings provide fresh evidence on students’ decision-making about human capital acquisition and labor market transition with important implications for education and labor market policy.
Subjects: 
economic preferences
education
dropout
human capital
job search
JEL: 
D01
D03
D91
I21
J64
Document Type: 
Working Paper

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