Parental Transfers, Student Achievement, and the Labor Supply of College Students

Using nationally representative data from the NLSY97 and a simultaneous equations model, this paper analyzes the financial motivations for and the effects of employment on U.S. college students’ academic performance. The data confirm the predictions of the theoretical model that lower parental transfers and greater costs of attending college increase the number of hours students work while in school, although students are not very responsive to these financial motivations. They also provide some evidence that greater hours of work lead to lower grade point averages (GPAs).