University choice: the role of expected earnings, non-pecuniary outcomes and financial constraints

Adeline Delavande () and Basit Zafar

No 2014-38, ISER Working Paper Series from Institute for Social and Economic Research

Abstract: We investigate the determinants of students’ university choice, with a focus on expected monetary returns, non-pecuniary factors enjoyed at school, and financial constraints, in the Pakistani context. To mitigate the identification problem concerning the separation of preferences, expectations and markets constraints, we combine rich data on individual-specific subjective expectations about labor market and non-pecuniary outcomes, with direct measures of financial constraints and students’ stated school choice both with and without financial constraints. Estimates from a life-cycle model show that future earnings play a small (but statistically significant) role. However, non-pecuniary outcomes, such as school’s ideology, are major determinants. Data on students’ choices without financial constraints allow for the outof- sample validation of the model, which shows a strikingly good fit. Our results show that 37% of students are financially constrained in the university choice, and that implementing policies relaxing financial constraints would increase students’ average lifetime subjective expected utility by 21%. From a methodological point, we find that ignoring non-pecuniary factors, uncertainty related to employment and drop-out, or direct measures of financial constraints, yields biased estimates – thereby underscoring the importance of having data on these aspects for understanding university choice in any context.

Date: 2014-10-30
New Economics Papers: this item is included in nep-edu and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (28)

Published

Downloads: (external link)
https://www.iser.essex.ac.uk/wp-content/uploads/fi ... ers/iser/2014-38.pdf (application/pdf)

Related works:
Working Paper: University choice: the role of expected earnings, non-pecuniary outcomes, and financial constraints (2014)
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:ese:iserwp:2014-38

Ordering information: This working paper can be ordered from
Publications Office, Institute for Social and Economic Research, University of Essex, Wivenhoe Park, Colchester, Essex CO4 3SQ UK
https://www.iser.essex.ac.uk/publications/

Access Statistics for this paper

More papers in ISER Working Paper Series from Institute for Social and Economic Research Publications Office, Institute for Social and Economic Research, University of Essex, Wivenhoe Park, Colchester, Essex CO4 3SQ UK. Contact information at EDIRC.
Bibliographic data for series maintained by Jonathan Nears ().