Education policies, pre-college human capital investment and educated unemployment

Xiangting Hu (), Xiangbo Liu (), Chao He and Tiantian Dai
Additional contact information
Xiangting Hu: Harbin Institute of Technology, Shenzhen
Xiangbo Liu: Renmin University of China

Journal of Economics, 2020, vol. 129, issue 3, No 2, 270 pages

Abstract: Abstract This paper employs a search and matching model featuring endogenous pre-college human capital investment to examine how education policies, such as subsidies, scholarships, and college capacity expansion, can affect individuals’ pre-college human capital investment, the college admission threshold and the unemployment rate of the educated. We explicitly model the college admission rule: each individual applies to college by sending her signal to the college. The college determines the admission threshold based on the distribution of signals and its capacity. Only those who send signals above the threshold will be admitted. Because the quality of signals depends on one’s pre-college human capital level, individuals are motivated to invest in pre-college human capital to compete for college admissions. We show that different education policies can deliver contrasting results. There are conditions under which education subsidies and scholarships can increase pre-college human capital investment and lower the unemployment rate of college graduates, while an expansion in the college capacity can yield opposite effects.

Keywords: Education; Competition; Human capital; Matching frictions (search for similar items in EconPapers)
JEL-codes: I20 J21 J64 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s00712-019-00676-6 Abstract (text/html)

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:kap:jeczfn:v:129:y:2020:i:3:d:10.1007_s00712-019-00676-6

DOI: 10.1007/s00712-019-00676-6

Access Statistics for this article

Journal of Economics is currently edited by Giacomo Corneo

More articles in Journal of Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().