Document Abstract
Published:
1 Apr 2008
Uncertainty, education, and the school-to-work transition: theory and evidence from Brazil
Analysing education and school-to-work transitions amongst young people in Brazil
This paper develops a model of investment in education and school-to-work transition under uncertainty, using Brazil as a case study. The main predictions of the model are confirmed by the empirical evidence on young individuals in living Brazil.
The main focus of the paper is to analyse the choice of the time when it is optimal to leave school. The decision about how much education it is desirable to acquire is modelled as a choice about the optimal timing of leaving school and joining the labour market.
The paper states that there are various sources uncertainties in developing country related to employment and wage outcomes. The first source of uncertainty pertains to the length of time that will elapse before individuals are able to find a job. The second source of uncertainty involves the conditions of the labour market after an individual leaves school, and in particular the level of wages over the course of their work life.
The paper makes use of cross-sectional survey data from the Pesquisa National por Amostra de Domicílios (PNAD) to examine whether the work or study status of young individuals can be influenced by a measure of wage variability at the level of States of the Brazilian Federation. Recent policy reforms aimed at improving the flexibility of labour markets in Brazil imply that these effects are potentially important.
The main focus of the paper is to analyse the choice of the time when it is optimal to leave school. The decision about how much education it is desirable to acquire is modelled as a choice about the optimal timing of leaving school and joining the labour market.
The paper states that there are various sources uncertainties in developing country related to employment and wage outcomes. The first source of uncertainty pertains to the length of time that will elapse before individuals are able to find a job. The second source of uncertainty involves the conditions of the labour market after an individual leaves school, and in particular the level of wages over the course of their work life.
The paper makes use of cross-sectional survey data from the Pesquisa National por Amostra de Domicílios (PNAD) to examine whether the work or study status of young individuals can be influenced by a measure of wage variability at the level of States of the Brazilian Federation. Recent policy reforms aimed at improving the flexibility of labour markets in Brazil imply that these effects are potentially important.
