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Accounting for the Changing Role of Family Income in Determining College Entry - Zurich Open Repository and Archive


Winter, Christoph (2014). Accounting for the Changing Role of Family Income in Determining College Entry. Scandinavian Journal of Economics, 116(4):909-963.

Abstract

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.

Abstract

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.

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1 citation in Web of Science®
1 citation in Scopus®
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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Economics
Dewey Decimal Classification:330 Economics
Language:English
Date:October 2014
Deposited On:09 Oct 2014 15:23
Last Modified:01 Oct 2016 00:00
Publisher:Wiley-Blackwell Publishing, Inc.
ISSN:0347-0520
Publisher DOI:https://doi.org/10.1111/sjoe.12076
Official URL:http://onlinelibrary.wiley.com/doi/10.1111/sjoe.12076/pdf
Related URLs:http://www.econ.uzh.ch/faculty/winter/enrolmentgap_april13.pdf
http://www.zora.uzh.ch/54335/

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