Testing for Educational Credit Constraints using Heterogeneity in Individual Time Preferences

Benjamin W. Cowan

No 345, Carlo Alberto Notebooks from Collegio Carlo Alberto

Abstract: I develop a model in which individual time discount rates have a larger e ect on hu- man capital accumulation when credit constraints are binding. Impatient individuals obtain less schooling when borrowing constraints limit the ability to nance consump- tion during school. Using data from the NLSY79, I show that self-reported measures of time preferences have a signi cantly higher e ect on the college attendance decisions of blacks than those of whites and the decisions of low-income youths than those of high- income youths. These results provide new evidence that members of disadvantaged groups obtain lower levels of schooling because they are credit constrained.

JEL-codes: I22 I23 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2014
New Economics Papers: this item is included in nep-edu
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Citations: View citations in EconPapers (1)

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