A Structural Model of Educational Attainment in Canada

Jorgen Hansen and Xingfei Liu

No 7237, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: In this paper, we develop and estimate a structural, dynamic model of schooling decisions using data extracted from the Canadian Youth in Transition Survey (YITS). The model incorporates forward-looking behavior and expectations about future benefits from investing in education. The results suggest that the effect of an increase in parental income on educational attainment is modest. For example, a 25 percent increase in parental income is predicted to increase post-secondary education (PSE) attendance by one percent only. However, our results indicate that financial resources, other than parental income, play a role in PSE enrollment. In particular, our model predicts that an increase in PSE tuition fees by $2,500 per grade level (for grade 13 and above) will reduce attendance in these grades by almost 9 percentage points for males and by 6.5 percentage points for females. We also simulate the impacts of changes in Programme for International Student Assessment (PISA) reading scores. Specifically, an increase of test scores with one standard deviation (which is comparable to the difference in average score for high school drop-outs and those with some PSE) increases PSE attendance by 10.2 percentage points for males and by 6.6 percentage points for females. At the same time, high school dropout rates are predicted to fall by 3.2 percentage points for males and by 2.8 percentage points for females. We also take advantage of the dynamics of the model and explore how a 25 percent increase in future wages for PSE students will affect current schooling decisions. This leads to an increase in PSE attendance by 2.2 percentage points for males and by 3.1 percentage points for females.

Keywords: educational attainment; structural estimation; forward-looking behavior; parental income; tuition fees; cognitive ability (search for similar items in EconPapers)
JEL-codes: I21 J01 (search for similar items in EconPapers)
Pages: 50 pages
Date: 2013-02
New Economics Papers: this item is included in nep-edu
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://docs.iza.org/dp7237.pdf (application/pdf)

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:iza:izadps:dp7237

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().