When Meritocracy Fails: College Expansion and the Rise of Intergenerational Persistence

Shijun Gu and Lichen Zhang
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Shijun Gu: Central University of Finance and Economics
Lichen Zhang: University of Hong Kong

Review of Economic Dynamics, 2026, vol. 62

Abstract: This paper quantifies the effects of college expansion under purely merit-based, competitive admissions, endogenizing pre-labor-market conditions. We develop a heterogeneous-agent life-cycle model where parents invest in their children’s pre-college human capital at multiple stages to compete for limited college slots. Applying the framework to China—where admissions rely solely on score ranks and enrollment has grown tenfold over the past 25 years—we find that score-based admissions increase the importance of human capital at the college admission stage relative to initial endowments. Family resources therefore shape admission indirectly through parental investment in pre-college human capital. Expanding college access under this system reduces intergenerational mobility because higher-income families respond by disproportionately increasing pre-college investments, strengthening the link between child achievement and parental income. Counterfactuals show that mobility would improve with college expansion if endogenous parental investment responses were shut down. (Copyright: Elsevier)

Keywords: College Expansion; Parental Investment; Human Capital; Child Development; Inequality; Intergenerational Mobility; Meritocracy (search for similar items in EconPapers)
JEL-codes: E21 E24 I24 J24 O15 (search for similar items in EconPapers)
Date: 2026
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DOI: 10.1016/j.red.2026.101369

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