Do wage expectations predict college enrollment? Evidence from healthcare

- Swiss healthcare trainees expect wages close to current market wages.
- Anticipated returns predict subsequent enrollment in nursing college.
- Subjective expectations are almost orthogonal to personal characteristics.
- Preference parameters affect enrollment as predicted by economic theory.

We study the effect of ex ante expected wages rather than realized wages on the decision to pursue a nursing college education in Switzerland. On average, wage expectations reflect observed market wages, but with large dispersion among individuals. We collected data from a full cohort of healthcare trainees in their third year of training on upper-secondary level. Those trainees who expected a greater return from nursing college (tertiary level) were more likely to enroll in nursing college later on; the effect is substantial and almost orthogonal to individuals' characteristics. This indicates that policies that increase returns from studying nursing can indeed attract new students to reduce the shortage of nurses. Subjective ex ante wage expectation data are useful in predicting the decision to enroll in college.