Borrowing Constraints, College Enrollment, and Delayed Entry

Johnson, Matthew

doi:10.1086/669964

Cited by 121 publications

(131 citation statements)

References 49 publications

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“…However, like Keane and Wolpin (2001) and Johnson (2010), our model suggests that there would be little impact on human capital investment ('early' or 'late') from relaxing borrowing constraints on college-age youth or older parents. At least in the short-run, relaxing constraints on young parents would substantially increase both 'early' investments in young children and 'late' investments in older children (e.g.…”

Section: Resultssupporting

confidence: 56%

“…This step requires fully solving the dynastic fixed point problem of Section 3 in steady state, simulating a number of conditional moment conditions, and comparing those moments with their empirical counterparts. In particular, we fit moments related to (i) the education distribution, (ii) the distribution of annual earnings for men ages 24-35 and 36-47 in the NLSY79, (iii) child schooling levels conditional on parental income and maternal schooling, and (iv) child wages at ages [24][25][26][27][28][29][30][31][32][33][34][35] conditional on their own educational attainment, maternal schooling, and parental income levels (when the child is ages 0-11). Appendix C provides greater detail on the calibration.…”

Section: Calibrating Other Parameters Using Simulated Methods Of Momentsmentioning

confidence: 99%

“…Keane and Wolpin (2001) and Johnson (2010) both emphasize the importance of differences in parental transfers by socioeconomic background in explaining differential schooling outcomes; however, parental transfers are exogenously determined and unaffected by policy and economic conditions in their models. By endogenizing parental transfers, we account for the fact that parents respond to different policies by adjusting transfers to their children.…”

Section: Introductionmentioning

confidence: 99%

“…Notes: Ratios based on average weekly wages over ages [24][25][26][27][28][29][30][31][32][33][34][35], discounting all wages to age 30 using a 5% discount rate. Average wages for high school dropouts and graduates also use measures from ages 22 and 23.…”

mentioning

confidence: 99%

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Early and Late Human Capital Investments, Borrowing Constraints, and the Family

Caucutt¹,

Lochner²

2012

142

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This paper investigates the importance of family borrowing constraints in determining human capital investments in children at early and late ages. We begin by providing new evidence from the Children of the NLSY (CNLSY) which suggests that borrowing constraints bind for at least some families with young children. Next, we develop an intergenerational model of lifecycle human capital accumulation to study the role of early versus late investments in children when credit markets are imperfect. We analytically establish the importance of dynamic complementarity in investment for the qualitative nature of investment responses to income and policy changes. We extend the framework to incorporate dynasties and use data from the CNLSY to calibrate the model. Our benchmark steady state suggests that roughly half of young parents and 12% of old parents are borrowing constrained, while older children are unconstrained. We also identify strong complementarity between early and late investments, suggesting that policies targeted to one stage of development tend to have similar effects on investment in both stages. We use this calibrated model to study the effects of education subsidies, loans and transfers offered at different ages on early and late human capital investments and subsequent earnings in the short-run and long-run. A key lesson is that the interaction between dynamic complementarity and early borrowing constraints means that early interventions tend to be more successful than later interventions at improving human capital outcomes.

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Section: Resultssupporting

confidence: 56%

Section: Calibrating Other Parameters Using Simulated Methods Of Momentsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

mentioning

confidence: 99%

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Early and Late Human Capital Investments, Borrowing Constraints, and the Family

Caucutt¹,

Lochner²

2012

142

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“…Gale and Scholz (1994) show that inter vivos transfers (IVTs) for education are sizeable, thus they should be incorporated into models of education acquisition. Keane and Wolpin (2001) and Johnson (2011) estimate parental IVTs as a function of observable characteristics from the NLSY79. Brown, Scholz, and Seshadri (2012) show that while parental contributions are assumed and expected in financial aid packages they are not legally enforceable nor universally given, implying substantial heterogeneity in access to resources for students with observationally similar families.…”

Section: Introductionmentioning

confidence: 99%

Education policy and intergenerational transfers in equilibrium

Meghir¹,

Abbott²,

Gallipoli³

et al. 2013

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract This paper compares partial and general equilibrium effects of alternative financial aid policies intended to promote college participation. We build an overlapping generations life-cycle, heterogeneous-agent, incomplete-markets model with education, labor supply, and consumption/saving decisions. Altruistic parents make inter vivos transfers to their children. Labor supply during college, government grants and loans, as well as private loans, complement parental transfers as sources of funding for college education. We find that the current financial aid system in the U.S. improves welfare, and removing it would reduce GDP by two percentage points in the long-run. Any further relaxation of government-sponsored loan limits would have no salient effects. The short-run partial equilibrium effects of expanding tuition grants (especially their need-based component) are sizeable. However, long-run general equilibrium effects are 3-4 times smaller. Every additional dollar of government grants crowds out 20-30 cents of parental transfers. Terms of use: Documents inJEL Classification: E24, I22, J23, J24.

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The evolution of the US family income–schooling relationship and educational selectivity

Belzil

Hansen

2020

J of Applied Econometrics

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Les cahiers de la série scientifique (CS) visent à rendre accessibles des résultats de recherche effectuée au CIRANO afin de susciter échanges et commentaires. Ces cahiers sont écrits dans le style des publications scientifiques. CIRANO is a private non-profit organization incorporated under the Quebec Companies Act. Its infrastructure and research activities are funded through fees paid by member organizations, an infrastructure grant from the government of Quebec, and grants and research mandates obtained by its research teams. Le CIRANO est un organisme sans but lucratif constitué en vertu de la Loi des compagnies du Québec. Le financement de son infrastructure et de ses activités de recherche provient des cotisations de ses organisations-membres, d'une subvention d'infrastructure du gouvernement du Québec, de même que des subventions et mandats obtenus par ses équipes de recherche. CIRANO Partners-Les partenaires du CIRANO Corporate Partners-Partenaires corporatifs Autorité des marchés financiers Bank of Canada Bell Canada BMO Financial Group Business Development Bank of Canada Caisse de dépôt et placement du Québec

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Borrowing Constraints, College Enrollment, and Delayed Entry

Cited by 121 publications

References 49 publications

Early and Late Human Capital Investments, Borrowing Constraints, and the Family

Early and Late Human Capital Investments, Borrowing Constraints, and the Family

Education policy and intergenerational transfers in equilibrium

The evolution of the US family income–schooling relationship and educational selectivity

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