Discussion Paper Details

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Title: Trapped, Delayed and Handicapped

Author(s): Susanna Sällström and Anna Sjogren

Publication Date: April 2002

Keyword(s): bayesian learning, self-confidence, self-selection and skill accumulation

Programme Area(s): Labour Economics

Abstract: The dynamics of self-confidence are modelled in an environment where rational individuals optimally choose education and occupations with the aim to acquire productive skills while learning about ability. It is shown how the presence of uninformative options can trap individuals below their potential. Furthermore the trade-off between probability of success and value of skills may induce uncertain individuals to acquire less productive skills on their way to ability intensive occupations. The value of information also induces uncertain individuals to delay labour market entry. The model can also explain differences in perseverance in the face of failure.

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Bibliographic Reference

Sällström, S and Sjogren, A. 2002. 'Trapped, Delayed and Handicapped'. London, Centre for Economic Policy Research.