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College Attrition and the Dynamics of Information Revelation

Tyler Ransom (), Esteban Aucejo, Arnaud Maurel () and Peter Arcidiacono
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Peter Arcidiacono: Duke University

No 529, 2014 Meeting Papers from Society for Economic Dynamics

Abstract: This paper investigates the determinants of college attrition in a setting where individuals have imperfect information about their schooling ability and labor market productivity. We estimate, a dynamic structural model of schooling and work decisions, where high school graduates choose a bundle of education and work combinations. We take into account the heterogeneity in schooling investments by distinguishing between two-, four-year colleges and graduate school, as well as science and non-science majors for four-year colleges. Individuals may also choose whether to work full-time, part-time, or not at all. A key feature of our approach is to account for correlated learning through college grades and wages, thus implying that individuals may leave or re-enter college as a result of the arrival of new information on their ability and productivity. We use our results to quantify the importance of informational frictions in explaining the observed school-to-work transitions and to examine sorting patterns.

Date: 2014
New Economics Papers: this item is included in nep-edu
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Working Paper: College Attrition and the Dynamics of Information Revelation (2016) Downloads
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