An Empirical Test of the Risk-Return Trade-Off in Educational Choice
| dc.contributor.author | Xueyu Cheng | |
| dc.date.accessioned | 2024-05-08T19:07:06Z | |
| dc.date.available | 2024-05-08T19:07:06Z | |
| dc.description.abstract | Education is commonly viewed as an investment in human capital. Is there a risk-return trade-off in education as in financial assets? This paper empirically tests the correlation between the risk and return of education using the Current Population Survey (CPS) data in 1968-2006. I construct longitudinal data by matching the consecutive CPS March supplements. I assume that the return to education is heterogeneous across individuals and random. I estimate a mixed model of earnings with random coefficient on schooling. Part of the estimation of the mixed model includes estimation of the variance-covariance structure of the random coefficients. I use the estimated variance of the random return to education to measure risk in educational choice. I find that the risk and return of education is positively correlated and the risk of educational investment has a significantly positive effect on the return to education. | |
| dc.identifier | www.iabe.org/domains/IABE-DOI/article.aspx?DOI=RBR-13-1.12 | |
| dc.identifier.uri | https://hdl.handle.net/20.500.12951/357 | |
| dc.title | An Empirical Test of the Risk-Return Trade-Off in Educational Choice | |
| dc.type | Journal Article, Academic Journal | |
| dcterms.bibliographicCitation | Review of Business Research 13(1), 97-102, (2013) |