Income expectations of school students entering Russian universities Studied are determiners of income expectation of Russian school students planning to enter universities. Data for the study are drawn from a survey of 1600 families conducted by the Laboratory for Institutional Analysis of Economic Reforms of HSE with the support of the Center for Fundamental Research at HSE in the spring of 2008 in major Russian cities. It has been discovered that two months before entering university, only 60 % percent of 11 th graders and their families have formed their expectations. The variation in income expectations depends on a number of variables, the most significant being the family income, the parents education level, the type of high school the student is graduating from, and the chosen program at a university. Families that have formed their expectations about the income in the post-university time, intend to send their children to major regional universities. Given that recently higher education has become virtually universal, this fact indicates that ideas about education qualities are becoming a significant differentiating factor of income expectation.
Institutions affect investment decisions, including investments in human capital. Hence institutions are relevant for the allocation of talent. Good market-supporting institutions attract talent to productive value-creating activities, whereas poor ones raise the appeal of rent-seeking. We propose a theoretical model that predicts that more talented individuals are particularly sensitive in their career choices to the quality of institutions, and test these predictions on a sample of around 95 countries of the world. We find a strong positive association between the quality of institutions and graduation of college and university students in science, and an even stronger negative correlation with graduation in law. Our findings are robust to various specifications of empirical models, including smaller samples of former colonies and transition countries. The quality of human capital makes the distinction between educational choices under strong and weak institutions particularly sharp. We show that the allocation of talent is an important link between institutions and growth.