Accounting for the Changing Role of Family Income in Determining College Entry
In this paper, I analyze the determinants of college enrolment and the changes in these determinants over time. I propose a quantitative life-cycle model with college enrolment. Altruistic parents provide financial support to their children. Using counterfactual experiments, I find that 24 percent of all households are financially constrained in their college decision. Constraints become more severe over time. I show that my model is consistent with a narrow college enrolment gap between students from rich and poor families, as previously reported in the empirical literature. The estimation of enrolment gaps is a popular reduced-form approach for measuring the fraction of constrained households. My results suggest that these reduced-form estimates are misleading, and that a structural model of parental transfers is needed to correctly identify constrained households. Further, I show that parental transfers are an important driver behind the changing role of family income as a determinant of college entry, a fact that is well documented for the US economy.
Year of publication: |
2014
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---|---|
Authors: | Winter, Christoph |
Published in: |
Scandinavian Journal of Economics. - Wiley Blackwell, ISSN 1467-9442. - Vol. 116.2014, 4, p. 909-963
|
Publisher: |
Wiley Blackwell |
Saved in:
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