We analyse how progressive taxation and education subsidies affect schooling deci-
sions when the returns to education are stochastic. We use the theory of real options to solve the problem of education choice in a dynamic, ...
It is clear that education has an important effect on wages paid in the labour market
However it not clear whether this is due to the role that education plays in raising the
productivity of workers (the human capital ...
We extend the standard human capital earnings function to include dispersion in the return to schooling by treating the return as a random coefficient. If the rapid expansion in participation in higher education has been ...