Labor Market Returns to Student Loans

Alonso Bucarey, Dante Contreras and Pablo Muñoz

Working Papers from University of Chile, Department of Economics

Abstract: This paper studies the labor market returns to a state guaranteed loan (SGL) used to finance university degrees. Using administrative data from Chile and a regression discontinuity design, we show that nine years after high school graduation students who enrolled at a university thanks to the SGL attended it for 5 years, foregoing 3 years of vocational education and accumulating additional 14 thousand dollars in student debt. Strikingly, these students do not benefit in terms wages, employment, type of contract, or type of employer. The low quality of institutions attended by loan users may account for these results.

Pages: 48 pages
Date: 2018-05
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