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Jel Classification:I2 

Discussion Paper
When College Might Not Be Worth It

In our last post, we showed that the economic benefits of a college degree still far outweigh the costs for the typical graduate, with a healthy and consistent return of 12 to 13 percent over the past few decades. But there are many circumstances under which college graduates do not earn such a high return. Some colleges are much more expensive than average, and financial aid is not guaranteed no matter which college a student attends. In addition, the potentially high cost of living on campus was not factored into our estimates. Some students also may take five or six years to finish their ...
Liberty Street Economics , Paper 20250416b

Report
How do college students form expectations?

This paper focuses on how college students form expectations about various major-specific outcomes. For this purpose, I collect a panel data set of Northwestern University undergraduates that contains their subjective expectations about major-specific outcomes. Although students tend to be overconfident about their future academic performance, they revised their expectations in expected ways. The updating process is found to be consistent with a Bayesian learning model. I show that learning plays a role in the decision to switch majors, and that major-switchers respond to information from ...
Staff Reports , Paper 378

Working Paper
Explaining Stagnation in the College Wage Premium

After growing substantially during the 1980s through the early 2000s, the college wage premium more recently has been largely unchanged, or stagnant. We extend the canonical production-function model of skill premiums to assess supply and demand contributions to the slowdown in the college wage premium, using annual CPS ASEC data from the early 1960s through 2023. To account for the rising importance of women in the college educated workforce, we estimate a hybrid model that incorporates components that are disaggregated by age and gender. We also allow for non-linearities and changes over ...
Working Paper Series , Paper 2025

Journal Article
The Long Road to Recovery: New York Schools in the Aftermath of the Great Recession

Using rich panel data and an interrupted time-series analysis, the authors examine how the funding and expenditure dynamics of New York school districts changed in the four years after the Great Recession. Extending prior work on the immediate effects of the recession on school finances in 2009-10 in Chakrabarti, Livingston, and Setren (2015), they take a longer-term view through 2012, to document what happened when support from federal stimulus funding began to dwindle and then ended. The analysis finds that the more than $6 billion in support from the American Recovery and Reinvestment Act ...
Economic Policy Review , Volume 25 , Issue Dec

Journal Article
Tough Choices: New Jersey Schools during the Great Recession and Beyond

This study examines the medium-term effects of the Great Recession on school finances in New Jersey using detailed school district panel data and an interrupted time series analysis. The authors find that the recession led to sharp cuts in school funding and expenditure, in spite of the federal stimulus. These cuts deepened as the stimulus abated. An analysis of variations by metropolitan area reveals that the Camden metro area, the highest poverty area reviewed, experienced considerably larger cuts in expenditures when the stimulus receded compared with other areas. The findings are ...
Economic Policy Review , Volume 27 , Issue 1 , Pages 1-34

Report
Getting ahead by spending more? Local community response to state merit aid programs

In more than half of U.S. states over the past two decades, the implementation of merit aid programs has dramatically reduced net tuition expenses for college-bound students who attend in-state colleges. Although the intention of these programs was to improve access to enrollment for high-achieving students, it is possible that they had unanticipated effects. We analyze whether state funding for higher education and K-12 education changed as a result of program implementation, and whether local school districts attempt to counter any such changes. We employ two methodologies to study whether ...
Staff Reports , Paper 872

Discussion Paper
Is College Still Worth It?

A college degree was once viewed as a surefire ticket to a good job and a clear pathway for upward mobility. However, concerns about the rising cost of college and the struggles of recent college graduates to find good jobs have led many Americans to lose confidence in higher education. This shift in sentiment has become even more widespread since the pandemic, as opportunities and wages have grown for those without a degree as labor markets strengthened. Indeed, many have been left wondering whether college is still worth it. In a two-part blog series, we offer an economic perspective on the ...
Liberty Street Economics , Paper 20250416a

Journal Article
Work, Leisure, and Family: From the Silent Generation to Millennials

This article analyzes the changes in family structure, fertility behavior, and the division of labor within the household from the Silent generation (cohort born in 1940-49) to the Millennial generation (cohort born in 1980-89). Using data from the Panel Study of Income Dynamics, this article documents the main trends and life-cycle profiles for each generation. The main findings are that (i) the wage-age profile has been shifting down over generations, especially for Millennial men; (ii) the returns to a four-year college degree or higher for men have increased for all generations; (iii) ...
Review , Volume 103 , Issue 4 , Pages 385-424

Working Paper
Reversal of Gender Gaps in Child Development: Evidence from Young Children in India

This paper provides unique evidence of a reversal of gender gaps in cognitive development in early childhood. We find steep caste and gender gradients and few substantive changes once children enter school. The gender gap, however, reverses its sign for the upper caste, with girls performing better than boys at age 5 but thereafter following the general pattern in India of boys performing better.
Working Papers , Paper 2014-11

Working Paper
Parents, Patience, and Persistence: A Novel Theory of Intergenerational College Attainment

We present a novel theory of intergenerational persistence in college attainment that does not rely on credit constraints, parental transfers and investments, or persistence in innate ability. The gist of our theory is heterogeneity in time preferences, which are endogenous since parents can teach patience to their children before the children make their college decisions. We show, analytically, that the most patient parents are simultaneously more likely to have a college degree and to educate their children to be patient. Persistence follows. We also show that persistence occurs if and only ...
Working Papers , Paper 2025-003

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