On the Distribution of College Dropouts: Wealth and Uninsurable Idiosyncratic Risk

Ali Ozdagli and Nicholas Trachter

No 15-15, Working Paper from Federal Reserve Bank of Richmond

Abstract: We present a dynamic model of the decision to pursue a college degree in which students face uncertainty about their future income stream after graduation due to unobserved heterogeneity in their innate scholastic ability. After matriculating and taking some exams, students re-evaluate their expectations about succeeding in college and may decide to drop out and start working. The model shows that, in accordance with the data, poorer students are less likely to graduate and are likely to drop out sooner than wealthier students. Our model generates these results without introducing explicit credit constraints.

Pages: 32 pages
Date: 2015-11-19
New Economics Papers: this item is included in nep-dge
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.richmondfed.org/-/media/richmondfedorg ... 2015/pdf/wp15-15.pdf Full text (application/pdf)

Related works:
Working Paper: On the Distribution of College Dropouts: Wealth and Uninsurable Idiosyncratic Risk (2011)
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:fip:fedrwp:15-15

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Working Paper from Federal Reserve Bank of Richmond Contact information at EDIRC.
Bibliographic data for series maintained by Christian Pascasio ().