Public Policy and College Attainment

Daniele Coen-Pirani and Rui Castro

No 1350, 2011 Meeting Papers from Society for Economic Dynamics

Abstract: We investigate the role of direct public support for education in explaining the post-WWII evolution of college attainment in the U.S. College attainment has surged from the end of WWII until the early 1970s, then declined for about a decade and has been slowly recovering towards the level of the early 1970s. Such dynamics are not easily understood with changes in skill-biased technology. Instead, the extent of public support for education paralleled the dynamics of college attainment, suggesting a potentially important role for public policy. We propose a model where the government controls the price, the quality, and the quantity of education in the public college system. In our model, agents of differing abilities decide whether to drop out or complete high-school, and whether to continue onto college. In the latter case, agents can choose to follow a two-year or a four-year program, in either the private or the public system. Our rich characterization of schooling choices is designed to help us identify the role of public policy in driving educational outcomes. Our model produces implications for college attainment in different programs and different institutions, and for the returns to schooling conditional on those choices. We use those implications to evaluate the hypothesis that direct public support for education has been a main driving force behind college attainment.

Date: 2011
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