Causes and Consequences of Student-College Mismatch

Oksana Leukhina (Federal Reserve Bank of Saint Louis)

21 mars 2023, 14h00–15h30

Salle Auditorium 4

Macroeconomics Seminar


The purpose of this paper is to understand the observed sorting of different students into colleges of varying quality and to quantify the tradeoff between efficiency and inequality associated with resorting of students. Our approach is to develop a model of college quality choice that features: rich student heterogeneity and statistical details of what happens to them in college and beyond (human capital accumulation, financials, asset accumulation, consumption, graduation, wages). Importantly, the model features information friction at entry along with preference shocks. We calibrate the model to the data from the 1997 National Longitudinal Survey of Youth augmented with restricted Geocode data and official college transcripts. The information friction at entry is identified with empirical estimates of enrollment elasticity with respect to tuition. We find that the information frictions and preference heterogeneity are equally important for generating the “undermatch” (i.e. the observation that many high achieving high school graduates enroll in community colleges or low quality four-year colleges). We find that the human capital loss associated with redistribution is small. We proceed to evaluate specific college admissions policies with respect to their ability to effectively redistribute incomes. The Information provision is most effective. Affirmative action is ineffective unless coupled with information provision. By Lutz Hendricks (UNC), Oksana Leukhina (FRB of St Louis), Tatyana Koreshkova (Concordia U)