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Accounting for the Changing Role of Family Income in Determining College Entry


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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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:23 Nov 2017 04:20
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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