Present Bias and Underinvestment in Education? Long-run Effects of Childhood Exposure to Booms in Colombia

54 Pages Posted: 11 May 2019

See all articles by Bladimir Carrillo

Bladimir Carrillo

Universidade Federal de Pernambuco

Multiple version iconThere are 2 versions of this paper

Date Written: March 16, 2019

Abstract

This paper examines the long-run impacts of income shocks by exploiting variation in coffee cultivation patterns within Colombia and world coffee prices during cohorts' school-going years in a differences-in-differences framework. The results indicate that cohorts who faced higher returns to coffee-related work during school-going years completed fewer years of schooling and have lower income in adulthood. These findings suggest that leaving school during temporary booms results in a significant loss of long-term income. This is consistent with the possibility that students may ignore or heavily discount the future consequences of dropout decisions when faced with immediate income gains.

Keywords: Information Avoidance, Energy Efficiency, Moral Wiggle Room

JEL Classification: J24, O12, O13

Suggested Citation

Carrillo Bermúdez, Bladimir, Present Bias and Underinvestment in Education? Long-run Effects of Childhood Exposure to Booms in Colombia (March 16, 2019). FEEM Working Paper No. 7.2019, Available at SSRN: https://ssrn.com/abstract=3386056 or http://dx.doi.org/10.2139/ssrn.3386056

Bladimir Carrillo Bermúdez (Contact Author)

Universidade Federal de Pernambuco ( email )

Recife
Brazil

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