Abstract
This paper analyses the demand for education in the framework of the human capital theory extended with employment prospects that depend on the amount of education. Unemployment considerations are especially important for the European countries in the 1980s. By using comparative statics we derive the theoretical properties of the model. In a number of important respects these results differ from their counterparts in the traditional human capital literature. By fitting a binomial logit model to a sample of educational choices of Dutch high school graduates we find substantial empirical support for the theory. High unemployment, by itself, does not drive youth towards additional education, but youth strives for more education in order to improve their employment prospects.
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