Skill-Biased Technical Change and the Cost of Higher Education: An Exploratory Model

Fang Yang and John Jones
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Fang Yang: SUNY-Albany

No 597, 2012 Meeting Papers from Society for Economic Dynamics

Abstract: We document trends in higher education costs and tuition over the past 50 years. To explain these trends, we develop and simulate a general equilibrium model with unbalanced technical change. We assume that higher education suffers from Baumol's (1967) service sector disease, in that the quantity of labor and capital needed to educate a student is constant over time. Calibrating the model, we show that it can explain the rise in college costs between 1959 and 2000. We then use the model to perform a number of numerical experiments. We find, consistent with a number of studies, that changes in the tuition discount rate have little long-run effect on college attainment.

Date: 2012
New Economics Papers: this item is included in nep-dge and nep-edu
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Working Paper: Skill-Biased Technical Change and the Cost of Higher Education: An Exploratory Model (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed012:597

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