Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/236320 
Year of Publication: 
2021
Series/Report no.: 
IZA Discussion Papers No. 14289
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
Education choices are made based on the expected returns to schooling. If individuals are badly informed, they may make inefficient choices. We directly elicit young people's subjective expectations at the age of 14-15 about earnings under different educational scenarios and find these predict university enrolment by the age of 18-19. Females expect lower earnings than males, likely anticipating the reality of the labour market. Living in a poorer household, weaker numeric skills and lower self-efficacy are also associated with lower expected returns to education. Comparing expectations with the actual earnings from a nationally representative sample of individuals matched by sex, region and place of residence, we find that expectations for earnings upon completing secondary education closely match observed earnings, while there is a tendency to overestimate the returns to completing a university degree. These results hold for both males and females although with considerable variation across regions and population subgroups.
Subjects: 
subjective expectations
earning realizations
Young Lives
Peru
JEL: 
I2
J22
J24
Document Type: 
Working Paper

Files in This Item:
File
Size
652.16 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.