Template-Type: ReDIF-Paper 1.0
Title: Sequential Choices, Option Values, and the Returns to Education
Author-Name: Manudeep Bhuller
Author-Email: manudeep.bhuller@econ.uio.no
Author-Name: Philipp Eisenhauer
Author-Email: peisen@amazon.com
Author-Name: Moritz Mendel
Author-Email: moritz.mendel12@gmail.com

Classification-JEL: J24, J31, D80
Keywords: sequential decisions, ex-ante returns, option values, reform evaluation

Abstract: Using detailed Norwegian data on earnings, education and work histories,
we estimate a dynamic structural model of education and sector choices that
captures rich life-cycle patterns by ability. We validate the model against variation
in education choices induced by a compulsory schooling reform. Our approach
allows us to estimate the ex-ante returns to different education tracks across the lifecycle
by individual ability and quantify the contribution of option values. We find
substantial heterogeneity in returns and establish crucial roles for option values and
re-enrollment in determining education choices and the impact of schooling policies.

Note: 
Length: 65
Creation-Date: 2024-07
Revision-Date: 
File-URL: https://www.crctr224.de/research/discussion-papers/archive/dp575
File-Format: application/pdf
Handle: RePEc:bon:boncrc:CRCTR224_2024_575