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Causes and Consequences of Student-College Mismatch

Author

Listed:
  • Lutz Hendricks
  • Tatyana Koreshkova
  • Oksana Leukhina

Abstract

What are the tradeoffs of meritocratic college admissions? On one hand, stronger sorting between students and colleges may produce more human capital on aggregate if higher ability students benefit more from attending higher quality colleges. On the other hand, stronger sorting generates a higher degree of earnings inequality and reduces upward mobility. In this paper, we examine student-college sorting and study aggregate implications of redistributive college admissions policies such as affirmative action. To this end, we develop a model with heterogeneous students and college types that differ on human capital production technology and financial costs/subsidies. We quantify our model using NLSY97 student-level and college transcript data, as well as quasi-experimental evidence on returns to college quality and relevance of information provision. Our quantitative model implies small efficiency losses from redistributive college admissions policies such as affirmative action based on socioeconomic status.

Suggested Citation

  • Lutz Hendricks & Tatyana Koreshkova & Oksana Leukhina, 2021. "Causes and Consequences of Student-College Mismatch," Working Papers 2022-026, Federal Reserve Bank of St. Louis, revised 18 Jul 2023.
    • Handle: RePEc:fip:fedlwp:94805
    DOI: 10.20955/wp.2022.026
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    More about this item

    Keywords

    college quality; human capital; college admissions; affirmative action;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education

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