The Wage Expectations of European College Students
University of Padua - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute for Economic Research); Institute for the Study of Labor (IZA)
Università Cattolica del Sacro Cuore di Milano - Department of Economics; Institute for the Study of Labor (IZA)
Johannes Kepler University Linz - Department of Economics; Institute for Advanced Studies (IHS) - Department of Economics & Finance; Centre for Economic Policy Research (CEPR); Institute for the Study of Labor (IZA)
IZA Discussion Paper No. 299
Expected earnings and expected returns to education are seen by labor economists as a major determinant of educational attainment. In spite of this, the empirical knowledge about expectations and their formation is scarce. In this paper we report the results of the first systematic study of the wage expectations of European college students. Our data are based on the replies to the same questionnaire by more than 6000 college students all over Europe. We study the determinants of wage expectations and expected employment probabilities, the variability of these expectations within a field of study and their variation across universities and fields. We also examine the trade-off between expected starting wages and wage growth. In the final section of the paper, we contrast expected returns to education with actual returns estimated from country-specific micro-data. In line with U.S. studies we find that students overestimate returns to education.
Number of Pages in PDF File: 48
Keywords: Returns to Education, Expectations Formation, Information Processing
JEL Classification: J30working papers series
Date posted: June 11, 2001
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