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.
- documents the scope for risk,
- discusses the tough disentanglement of heterogeneity and risk,
- surveys the analytical models,
- laments the absence of a good workhorse model, and
- points out the challenges worth tackling:
- document ex ante risk that investors face,
- develop a tractable and malleable analytical model, and
- integrate the option of consumption smoothing in analytical and empirical work.
Hedging labour market risk in the stock market can be safely ignored.