In this paper we explore the implication of a morbidity risk for the relationship between longevity and annuitization. We divide old-age life into two periods with uncertain survival from the end of the first to the end of the second. We show that a rise in the survival rate causes different...

The paper examines the scope for mutually beneficial intergenerational cooperation, and looks at various attempts to theoretically explain the emergence of norms and institutions that facilitate this cooperation. After establishing a normative framework, we examine the properties of the...

This paper explores the role of marriage when markets are incomplete so that individuals cannot diversify their idiosyncratic labor income risk. Ceteris paribus, an individual would prefer to marry a "hedge" (i.e., a spouse whose income is negatively correlated with her own) as it raises her...

This paper considers how optimal education and tax policy depends on the risk properties of human capital. It is demonstrated that a key feature of human capital investments is whether they increase or decrease wage risk. In a benchmark model it is shown that this feature alone determines...

Empirical studies show that years of schooling are positively correlated with good health. The implication may go from education to health, from health to education, or from factors that influence both variables. We formalize a model that determines an individual's demand for knowledge and...

While uncertainty abounds in almost any decision on investment in schooling, it is mostly ignored in research and virtually absent in labour economics text books. This paper documents the scope for risk, discusses the tough disentanglement of heterogeneity and risk, surveys the analytical...

This paper uses a field experiment to answer how information frictions between parents and their children affect investments in education and how much reducing these frictions can improve student achievement. In Los Angeles, a random sample of parents was provided detailed information about...

This paper is motivated by the fact that nearly half of U.S. college students drop out without earning a bachelor's degree. Its objective is to quantify how much uncertainty college entrants face about their graduation outcomes. To do so, we develop a quantitative model of college choice. The...

The direct democratic choice of an examination standard, i.e., a performance level required to graduate, is evaluated against a utilitarian welfare function. It is shown that the median preferred standard is inefficiently low if the marginal cost of reaching a higher performance reacts more...

We investigate externalities in higher education enrollment over the course of development in a two-sector model. Each sector works with only one type of labor, skilled or unskilled, and individuals are differentiated according to their cost of acquiring human capital. Both sectors exhibit...