The Role of Expectations in Adolescent Schooling Choices: Do Youths Respond to Economic Incentives?

Posted: 29 Feb 2008

See all articles by Robert Haveman

Robert Haveman

University of Wisconsin - Madison - Department of Economics; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics; CESifo (Center for Economic Studies and Ifo Institute)

Kathryn Wilson

Kent State University - College of Business Administration

Barbara Wolfe

University of Wisconsin-Madison; IZA Institute of Labor Economics; CESifo (Center for Economic Studies and Ifo Institute); RSSS-economics; National Bureau of Economic Research (NBER)

Abstract

We address the role of youths` own choice-conditioned expectations in understanding their schooling choices by constructing a choice (or "switching") model. We emphasize the effect of individual student perceptions regarding the returns associated with graduating from high school versus dropping out, while controlling for an extensive set of family and community factors. We find that youths` expected income returns to graduating from high school are influential in their schooling choices, even when an extensive set of background, economic, family, and neighborhood variables, designed to capture the effects of parental and governmental decisions, is introduced into the analysis. (JEL I20, J24)

Suggested Citation

Haveman, Robert H. and Wilson, Kathryn and Wolfe, Barbara L., The Role of Expectations in Adolescent Schooling Choices: Do Youths Respond to Economic Incentives?. Economic Inquiry, Vol. 43, Issue 3, pp. 467-492, 2005. Available at SSRN: https://ssrn.com/abstract=906246

Robert H. Haveman

University of Wisconsin - Madison - Department of Economics ( email )

1180 Observatory Drive
Madison, WI 53706
United States
608-263-7398 (Phone)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Kathryn Wilson (Contact Author)

Kent State University - College of Business Administration ( email )

P.O. Box 5190
Kent, OH 44242-0001
United States

Barbara L. Wolfe

University of Wisconsin-Madison ( email )

Social Science Bldg
Madison, WI 53706
United States
6082626358 (Phone)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

RSSS-economics ( email )

Canberra, Australian Capital Territory 2601
Australia

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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