How Much to Invest and What Degree to Get? Education As a Strategy on the Labour Market Scale

Abstract

When workers hear about a possible promotion, it is common for them to get training, and they can do so through education. However, there is the possibility that the worker needs to receive a salary according to the knowledge acquired in such training. In this study, considering a population of employed workers with incomplete secondary school, we apply game theory concepts to explore whether workers can train through study. If so, the model shows the percentage of the salary the worker is willing to invest in his education. Furthermore, the cost of studying implicitly involves an opportunity cost, deduced quantitatively in the model. In conclusion, our article defines specific thresholds to decide if the worker should study, the economic investment, and the time he would spend on it, depending on how strict the company is in auditing. The analysis does not define a Nash equilibrium since the company’s reaction is not considered.