The Nature of Credit Constraints and Human Capital

Lance Lochner and Alexander Monge-Naranjo

No 2011-024, Working Papers from Human Capital and Economic Opportunity Working Group

Abstract: We develop a human capital model with borrowing constraints explicitly derived from government student loan (GSL) programs and private lending under limited commitment. The model helps explain the persistent strong positive correlation between ability and schooling in the U.S., as well as the rising importance of family income for college attendance. It also explains the increasing share of undergraduates borrowing the GSL maximum and the rise in student borrowing from private lenders. Our framework offers new insights regarding the interaction of government and private lending as well as the responsiveness of private credit to economic and policy changes.

Date: 2010-08
Note: M
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Citations: View citations in EconPapers (6)

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http://humcap.uchicago.edu/RePEc/hka/wpaper/Lochne ... edit-constraints.pdf First version, August 26, 2010 (application/pdf)
http://www.econ.psu.edu/~aum26/AER_Monge.pdf
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Related works:
Journal Article: The Nature of Credit Constraints and Human Capital (2011)
Working Paper: The Nature of Credit Constraints and Human Capital (2010)
Working Paper: The Nature of Credit Constraints and Human Capital (2009)
Working Paper: The Nature of Credit Constraints and Human Capital (2008)
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