Seminar: Katja M. Kaufmann, Bocconi University and IGIER

Title: Educational Choices and Subjective Expectations of Returns: Evidence on Intra-Household Decisions and Gender Differences.

The goal of this paper is to improve our understanding of educational decisions in two dimensions: First, we investigate, if determinants of schooling differ between male and female youths. We take into account expectations about monetary returns to schooling, perceptions about earnings and unemployment risk and returns to schooling in the marriage market. Second, we analyze the decision-making process within the household by addressing the question whose expectations matter in schooling decisions, the ones of the parents or the ones of the youths, and whether this depends on the gender of the youth. To address these questions we use a data set on Mexican teenagers that elicits their own and their parents' beliefs about future earnings for different scenarios of highest schooling degree, that contains proxies for returns in the marriage market and provides information about the actual schooling choice.We find that boys care more about monetary returns to schooling than girls {in particular in the decision to attend college{, while marriage market considerations seem particularly important for girls. Gender differences in preferences are smaller in families with more educated parents. Risk perceptions matter for the high school decision and seem generally more important from the perspective of the parents. In terms of the intra-household decision process, boys seem to either decide on their own or jointly with their fathers, while mothers are always involved in the schooling decisions of girls. The exact role of parents depends on household composition and parental education.