DP15749 University Dropout Problems and Solutions

Author(s): Giuseppe Bertola
Publication Date: February 2021
Keyword(s): Higher education, Option value
JEL(s): I22, I28
Programme Areas: Labour Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=15749

Frequent non-completion in optional education can be efficient if dropouts optimally exercise an option rationally foreseen by previous enrollment choices. This paper shows that in educational opportunities and groups of students where enrollment resolves more pronounced individual uncertainty both enrollment and dropout are higher, with ambiguous degree completion effects, and educational outcomes are unambiguously better in expectation and on average.