The college earnings premium and changes in college enrollment: Testing models of expectation formation

Eleanor Dillon

Labour Economics, 2017, vol. 49, issue C, 84-94

Abstract: This paper studies how students build expectations of the future price of college skills when making college enrollment decisions. I compare several possible proxies for students’ expectations of the lifetime earnings gains from college. Students may base their expectations on the earnings of current workers or they may have some information about future earnings. Since 1970, a forecast of future earnings based on static expectations has been a poor predictor of the ex post college premium for successive cohorts. Nonetheless, high relative earnings for college-educated workers at the time a student graduates high school increases his probability of enrolling in college, while his cohort’s future realized earnings do not. A 10 percentage point increase in the contemporaneous college premium is associated with a 1 percentage point rise in college enrollment rates, controlling for tuition and student characteristics.

Keywords: College premium; College enrollment; Belief formation (search for similar items in EconPapers)
Date: 2017
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0927537117303056
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:labeco:v:49:y:2017:i:c:p:84-94

DOI: 10.1016/j.labeco.2017.09.006

Access Statistics for this article

Labour Economics is currently edited by A. Ichino

More articles in Labour Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().