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Working Paper
On the aggregate and distributional implications of productivity differences across countries
We develop a quantitative theory of human capital with heterogeneous agents in order to assess the sources of cross-country income differences. The cross-sectional implications of the theory and U.S. data are used to restrict the parameters of human capital technology. We then assess the model's ability to explain the cross-country data. Our quantitative model generates a total-factor-productivity (TFP) elasticity of output per worker of 2.8. This implies that a factor of 3 difference in TFP is amplified through physical and human capital accumulation to generate a factor of 20 difference in ...
Working Paper
Causes and Consequences of Student-College Mismatch
Our objective is to understand the observed patterns of student-college sorting and earnings premia associated with college quality in the United States. Higher quality colleges have higher graduation rates and their graduates earn more. Yet, a large fraction of high scoring students enroll in two-year schools and low quality four-year schools – this “undermatch” phenomenon is more pronounced for low income students. To understand these patterns, we develop a model with heterogeneous students and colleges that differ in human capital production technology and financial costs. We ...
Working Paper
Expanding Access to Selective Colleges
This paper studies the effects of expanding high-quality public university capacities on student earnings and welfare. Using a quantitative model of college choice, we find that expanding the most selective colleges by 20 percent increases skilled labor supply by 5.3 percent, aggregate earnings by 0.8 percent, and welfare by 2.2 percent. The gains arise because a large number of high ability students are rationed out of selective colleges. When admitted, these students graduate at high rates and enjoy substantial earnings gains. The earnings gains generated by expanding college capacity are ...
Working Paper
Causes and Consequences of Student-College Mismatch
College admissions are highly meritocratic in the U.S. today. It is not the case in many other countries. What is the tradeoff? On one hand, meritocracy produces more human capital overall if higher ability students learn more in college and if they learn more in higher quality colleges. This leads to a higher overall level of earnings (i.e. greater efficiency, loosely speaking). On the other hand, more meritocracy generates a higher degree of earnings inequality. In this paper, we quantify this efficiency-equality tradeoff. Our results suggest small efficiency losses/gains from student ...
Working Paper
Expanding College Access
This paper studies the effects of expanding high-quality public university capacities on student earnings and welfare. Using a quantitative model of college choice, we find that expanding the most selective colleges by 20 percent increases aggregate earnings by 0.8 percent and welfare by 2 percent. The gains arise because a large number of high-ability students are rationed out of selective colleges. When admitted, these students graduate at high rates and enjoy substantial earnings gains. The earnings gains generated by expanding college capacity are eight times larger than the fiscal cost ...
Working Paper
College Access and Intergenerational Mobility
This paper studies how college admissions preferences for low income students affect intergenerational earnings mobility. We develop a quantitative model of college choice with quality differentiated colleges. We find that admissions preferences substantially increase low income enrollment in top quality colleges and intergenerational earnings mobility. The associated losses of aggregate earnings are very small.
Working Paper
College Access and Intergenerational Mobility
This paper studies how college admissions preferences for lower-income students affect intergenerational earnings mobility. We develop a quantitative model of college choice with quality-differentiated colleges. We find that admissions preferences substantially increase lower-income enrollment in selective colleges and intergenerational earnings mobility. The associated losses of aggregate earnings are very small.
Working Paper
Causes and Consequences of Student-College Mismatch
What are the tradeoffs of meritocratic college admissions? On one hand, stronger sorting between students and colleges may produce more human capital on aggregate if higher ability students benefit more from attending higher quality colleges. On the other hand, stronger sorting generates a higher degree of earnings inequality and reduces upward mobility. In this paper, we examine student-college sorting and study aggregate implications of redistributive college admissions policies such as affirmative action. To this end, we develop a model with heterogeneous students and college types that ...
Working Paper
On Expanding Public Funding of Selective Colleges
As college attainment expanded in the U.S., the fraction of public funds allocated to selective colleges and universities declined. Does this make sense from an efficiency standpoint, given that the majority of college entrants face the highest financial returns at selective colleges? Should the states instead be expanding access to high quality colleges? In this paper, we examine reallocating public funds from low quality to high quality colleges in a spending-neutral way. We find that this policy leads to a decline in aggregate earnings and intergenerational income mobility. Public spending ...
Working Paper
Expanding Access to Selective Colleges
This paper studies the effects of expanding high-quality public university capacities. Using a quantitative model of college choice, we find that expanding the most selective colleges by 20 percent increases aggregate earnings by 0.8 percent and welfare by 2.2 percent. The gains arise because a large number of high-ability students are rationed out of selective colleges. When admitted, these students graduate at high rates and enjoy substantial earnings gains. These earnings gains are eight times larger than the fiscal cost of financing the expansion. Our findings remain robust when we ...