Trapped, Delayed and Handicapped

29 Pages Posted: 28 May 2002

See all articles by Susanna Sallstroem

Susanna Sallstroem

University of Cambridge - Faculty of Economics and Politics; Centre for Economic Policy Research (CEPR)

Anna Sjögren

IFAU - Institute for Labour Market Policy Evaluation; Stockholm University - Swedish Institute for Social Research (SOFI)

Date Written: April 2002

Abstract

The dynamics of self-confidence are modelled in an environment where rational individuals optimally choose education and occupations with the aim to acquire productive skills while learning about ability. It is shown how the presence of uninformative options can trap individuals below their potential. Furthermore the trade-off between probability of success and value of skills may induce uncertain individuals to acquire less productive skills on their way to ability intensive occupations. The value of information also induces uncertain individuals to delay labour market entry. The model can also explain differences in perseverance in the face of failure.

Keywords: Self-confidence, self-selection, skill accumulation, Bayesian learning

JEL Classification: D83, J24

Suggested Citation

Sallstroem, Susanna and Sjoegren, Anna, Trapped, Delayed and Handicapped (April 2002). Available at SSRN: https://ssrn.com/abstract=314205

Susanna Sallstroem (Contact Author)

University of Cambridge - Faculty of Economics and Politics ( email )

Austin Robinson Building
Sidgwick Avenue
Cambridge, CB3 9DD
United Kingdom
+44 1223 335 278 (Phone)
+44 1223 335 475 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Anna Sjoegren

IFAU - Institute for Labour Market Policy Evaluation ( email )

Box 513
751 20 Uppsala
Sweden

Stockholm University - Swedish Institute for Social Research (SOFI) ( email )

Kyrkgatan 43B
SE-106 91 Stockholm
Sweden

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