The risk of investment in schooling has largely been ignored. We assess the variance in the rate of return by surveying the international empirical literature from this fresh perspective and by simulating risky earnings profiles in alternative options, choosing parameters on basis of the very...

In this paper we test for risk compensation in wages using Danish panel data. With the conviction that the type of education is as important as the education length, we use a very detailed description of the type of education reached by the Danish population to calculate different measures of...

We use data from Spain to test for an effect of earnings risk and skewness on individual wages. We carry out separate estimation for men, women, public and private sector employees. In accordance with previous evidence for the US we show the existence of a riskreturn trade-off across occupations...

We develop a simple human capital model for optimum schooling length when earnings are stochastic, and highlight the pivotal role of risk attitudes and the schooling gradient of earnings risk. We use Spanish data to document the gradient and to estimate individual response to earnings risk in...

Utility theory suggests that foreseeable risk should increase the compensation for work. This paper expands on this notion: on basis of utility theory, people should care not only about risk but also about the skewness in the distribution of the compensation paid. In particular, because the...

Firms hiring fresh graduates face uncertainty on the future productivity of workers. Intuitively, one expects starting wages to reflect this. Formal analysis supports the intuition. We use the dispersion of exam grades within a field of education as an indicator of the heterogeneity that...

We use a unique data set about the wage distribution that Swiss students expect for themselves ex ante, deriving parametric and non-parametric measures to capture expected wage risk. These wage risk measures are unfettered by heterogeneity which handicapped the use of actual market wage...

There is no robust empirical support for the effect of financial incentives on the decision to work in self-employment rather than as a wage earner. In the literature, this is seen as a puzzle. We offer a focus on the opportunity cost, i.e. the wages given up as an employee. Information on...

We ask individuals for their reservation price of a specified lotteryand deduce their Arrow-Pratt measure of risk aversion.This allows direct testing of common hypotheses on risk attitudes inthree datasets. We find that risk aversion indeed fallswith income and wealth. Entrepreneurs are less...

We develop a simple human capital model for optimum schooling length when earnings are stochastic, and highlight the pivotal role of risk attitudes and the schooling gradient of earnings risk. We use Spanish data to document the gradient and to estimate individual response to earnings risk in...