Substitution Effects in College Admissions

Mikkel Gandil ()

No 3/2021, Memorandum from Oslo University, Department of Economics

Abstract: I show how local supply changes create ripple effects in a national educational market. Admitting an applicant to a program will free up a slot to be filled at her next-best alternative. To investigate such substitution effects I re-engineer the centralized admission system of the Danish tertiary education sector and simulate equilibria under counterfactual supply. I estimate potential earnings with a regression discontinuity design and quantify market clearings in terms of earnings. On average, a change of 10 slots leads to 15 applicants moving and substitution effects explain 40 percent of the variation in earnings. Substitution externalities are generally positive but vary in sign and magnitude. I document a trade-off between earnings and inequality.

Keywords: Field of study; College admission; Program evaluation; RDD (search for similar items in EconPapers)
JEL-codes: C63 H52 I21 I22 I24 I26 J24 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2021-09-06
New Economics Papers: this item is included in nep-edu, nep-eur and nep-lma
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:osloec:2021_003

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