This paper investigates the role of parental expected returns to schooling as determinants of future schooling decisions. I show that when observing schooling decisions two years after the collection of information about perceived returns, parental subjective expectations are strong predictors for the probability of the child to be enrolled in secondary school. I provide evidence that this relation is distinctively different when looking at boys and girls. By using the unique longitudinal dimension of the dataset, I provide evidence against cognitive biases in expectation reporting and against endogeneity issues, which supports the use of subjective data in decision models.
D13, J12, J16, D8, I2, O15
Are Parental Perceived Returns to Schooling predicting Future Schooling Decisions? Evidence from Macedonia
Keywordssubjective expectations; returns to schooling; gender; cognitive biases