Young, gifted and lazy? The role of ability and labor market prospects in student effort decisions

Abstract

This paper examines the decision-making process of students from an economic perspective in order to understand what determines an individual's willingness to provide effort. Our theoretical model predicts that ability and job market prospects are positive determinants. Analyzing a novel dataset on thousands of German students, however, we instead find that ability has a significantly negative effect on effort. It seems that the marginal gain of increasing effort in terms of higher expected income after studying is lower for high-ability students compared to low-ability students. In regard to the second determinant, the evidence rejects a similar argument, according to which great job market prospects may impair student effort. Applying an instrumental variable approach based on official unemployment data on regional labor markets, we can confirm our prediction on the positive role of perceived employment prospects in actual student behavior.

Employment Training at the University: Employment Expectations in Times of Pandemic

“…Approaching graduation and subsequent labour market insertion influence the evolution of students' expectations, who are becoming more aware of the job requirements. This perspective could reduce their effort, encouraging rejection of the curricular contents [27].…”

“…Aspects such as salary expectations differ according to gender, with higher aspirations on the part of males [22][23][24]. The socioeconomic status of the student or the self-perception of skills fostered by the university may help to explain these differences [8,[25][26][27]. Additionally, the higher the socioeconomic status of the family is, the higher the salary expectations [28].…”

Seeking Shelter in Times of Crisis? Unemployment, Perceived Job Insecurity and Trade Union Membership

“…3 The idea of using changes in regional labour market conditions as an exogenous source of variation in individual perceptions of economic conditions goes back to Lusardi (1997). See Reichert et al (2015) and Chadi et al (2019) for more recent studies based on this approach. 4 There is a large body of research on the implications of job termination for the individual worker based on the incidence of a plant closure.…”

Understanding the Response to High-Stakes Incentives in Primary Education

“…For example, empirical studies demonstrate achievement effects in response to changes in the returns to education(Abramitzky and Lavy, 2014;Chadi et al, 2019), direct financial incentives for academic performance, such as merit scholarships or financial rewards for passing grades(Henry and Rubenstein, 2002;Kremer et al, 2009;Pallais, 2009;Angrist and Lavy, 2009;Leuven et al, 2010;Jackson, 2010a;Behrman et al, 2015;Burgess et al, 2016;Barrow and Rouse, 2018;Montalban, 2019). There are also studies that point to the importance of non-financial incentives, such as differences in the value of leisure(Stinebrickner and Stinebrickner, 2008;Metcalfe et al, 2019), high school exit exams(Jürges et al, 2005), exogenous changes in one's GPA(Hvidman and Sievertsen, 2019), academic probation(Lindo et al, 2010), or high school campus leave policies that are conditional on academic performance (Lichtman-Sadot, 2016).…”