The Evidence on Credit Constraints in Post-Secondary Schooling

Pedro Carneiro () and James J. Heckman

No 518, IZA Discussion Papers from Institute for the Study of Labor (IZA)

Abstract: This paper examines the family income—college enrollment relationship and the evidence on credit constraints in post-secondary schooling. We distinguish short-run liquidity constraints from the long-term factors that promote cognitive and noncognitive ability. Long-run factors crystallized in ability are the major determinants of the family income—schooling relationship, although there is some evidence that up to 8% of the U.S. population is credit constrained in a short-run sense. Evidence that IV estimates of the returns to schooling exceed OLS estimates is sometimes claimed to support the existence of substantial credit constraints. This argument is critically examined.

Keywords: human capital; return to education; credit constraints (search for similar items in EconPapers)
JEL-codes: I28 D33 H43 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ltv and nep-pbe
Date: Written
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Related works:
Working Paper: The Evidence on Credit Constraints in Post-Secondary Schooling (2002)
Journal Article: The Evidence on Credit Constraints in Post--secondary Schooling (2002)
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