Skill-Biased Technical Change and the Cost of Higher Education

John Jones and Fang Yang

Journal of Labor Economics, 2016, vol. 34, issue 3, 621 - 662

Abstract: We document the growth in higher education costs and tuition over the past 50 years. To explain these trends, we develop a general equilibrium model with skill- and sector-biased technical change. Finding the model's parameters through a combination of estimation and calibration, we show that it can explain the rise in college costs between 1961 and 2009, along with the increase in college attainment and the change in the relative earnings of college graduates. The model predicts that if college costs had ceased to grow after 1961, enrollment in 2010 would have been 3%–6% higher.

Date: 2016
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Related works:
Working Paper: Skill-Biased Technical Change and the Cost of Higher Education (2014)
Working Paper: Skill-Biased Technical Change and the Cost of Higher Education (2012)
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