Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/20941 
Year of Publication: 
2002
Series/Report no.: 
IZA Discussion Papers No. 641
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
We develop a simple human capital model for optimum schooling length when earnings are stochastic, and highlight the pivotal role of risk attitudes and the schooling gradient of earnings risk. We use Spanish data to document the gradient and to estimate individual response to earnings risk in deciding on attending university education, by measuring risk as the residual variance in regional earnings functions. We find that the basic response is negative but that in households with lower risk aversion, the response may be reversed to positive.
Subjects: 
earnings risk
schooling decisions
JEL: 
I21
Document Type: 
Working Paper

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