This article studies the effect of graduating from college on lifetime earnings. We develop a quantitative model of college choice with uncertain graduation. Departing from much of the literature, we model in detail how students progress through college.
A negative relationship between income and fertility has persisted for so long that its existence is often taken for granted. One economic theory builds on this relationship and argues that rising inequality leads to greater differential fertility between rich and poor.
This paper is motivated by the fact that nearly half of U.S. college students drop out without earning a bachelor's degree. Its objective is to quantify how much uncertainty college entrants face about their graduation outcomes. To do so, we develop a quantitative model of college choice.
The English structural transformation from farming to manufacturing was accompanied by rapid technological change, expansion of trade, and massive population growth.
In this paper we compute the optimal tax and education policy transition in an economy where progressive taxes provide social insurance against idiosyncratic wage risk, but distort the education decision of households. Optimally chosen tertiary education subsidies mitigate these distortions.
Mulligan and Rubinstein (2008) (MR) argued that changing selection of working females on unobservable characteristics, from negative in the 1970s to positive in the 1990s, accounted for nearly the entire closing of the gender wage gap.
The probability of dropping out of high school varies considerably with parental education. Using a rich Canadian panel data set, we examine the channels determining this socioeconomic status effect.
We examine the extent to which tuition and needs-based aid policies explain important differences in the relationship between family income and post-secondary attendance relationships between Canada and the U.S.
We study efficient allocations and optimal policies in a Mirrleesean life-cycle economy with risky human capital accumulation and permanent ability differences. We assume that ability, labor supply, learning effort and returns to human capital are all private information of the agents.
Several frictions restrict the governments ability to tax assets. First of all, it is very costly to monitor trades on international asset markets.
Human capital is one of the largest assets in the economy and in theory may play an important role for asset pricing. Human capital is heterogeneous across investors. One source of heterogeneity is industry affiliation.
Is skill dispersion a source of comparative advantage? In this paper we use microdata from the International Adult Literacy Survey to show that the effect of skill dispersion on trade flows is quantitatively similar to that of the aggregate endowment of human capital.
We discuss a simple model in which parents and children make investments in the children's education and investments for other purposes and parents can transfer cash to their children.
We review studies of the impact of credit constraints on the accumulation of human capital. Evidence suggests that credit constraints are increasingly important for schooling and other aspects of households' behavior.
In a heterogeneous life cycle economy with human capital accumulation, the option to discharge student loans under a liquidation regime helps alleviate
We develop a human capital model with borrowing constraints explicitly derived from government student loan (GSL) programs and private lending under limited commitment.
The federal government makes low-cost financing for higher education widely available through its fast-growing student loan programs.
We study the structure of optimal wedges and capital taxes in a dynamic Mirrlees economy with endogenous distribution of skills. Human capital is a private, stochastic state variable that drives the skill process of each individual.
We develop a general stochastic model of directed search on the job. Directed search allows us to focus on a Block Recursive Equilibrium (BRE) where agents' value functions, policy functions and market tightness do not depend on the distribution of workers over wages and unemployment.
We estimate a principal-agent model of moral hazard with longitudinal data on firms and managerial compensation over two disjoint periods spanning 60 years to investigate increased value and variability in managerial compensation.
I quantify the effects of alternative student loan policies on college enrollment, borrowing behavior, and default rates in a heterogeneous model of life-cycle earnings and human capital accumulation.
I quantify the effects of alternative student loan policies on college enrollment, borrowing behavior, and default rates in a heterogeneous model of life-cycle earnings and human capital accumulation.
Recent calls for wage subsidies have emphasized their value for attaching low-skill persons to the workplace, attracting them away from lives of idleness or crime (Phelps, 1997; Heckman, Lochner, Smith and Taber, 1997; and Lochner, 1998).
This paper constructs a tractable general equilibrium model of search with risk aversion. An increase in risk aversion reduces wages, unemployment, and investment. Unemployment insurance has the opposite effect: insured workers seek high‐wage jobs with high unemployment risk.