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Participation in Higher Education: A Random Parameter Logit Approach with Policy Simulations

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Author Info

  • Flannery, Darragh

    ()
    (University of Limerick)

  • O'Donoghue, Cathal

    ()
    (Teagasc Rural Economy Research Centre)

Abstract

In this paper we present a theoretical model of higher education participation. We assume that young people that complete upper secondary education are faced with three choices, go to higher education, not go to higher education or go to higher education and work part time. Utilizing the Living in Ireland survey data 1994-2001 we model this choice in an Irish context by variation in costs (direct and indirect), the estimated lifecycle returns and household credit constraints. Using a random parameters logit choice model we find that simulated lifecycle earnings positively impact the educational/labour choices of young individuals in Ireland. This positive relationship is also found to be true for a choice-specific household income variable constructed in the paper. From the random parameters logit estimations we also find that preferences for choices with higher simulated lifecycle earnings and household income vary across individuals. We conduct policy simulations from our estimations and found that increasing student financial aid levels by 10% combined with a slight widening of the income limits for these aids can lead to significant movement away from the decision to not enter higher education.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4163.

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Length: 32 pages
Date of creation: May 2009
Date of revision:
Handle: RePEc:iza:izadps:dp4163

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Related research

Keywords: higher education participation; random parameters logit model; lifecycle simulated earnings; higher education policy;

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References

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  1. Barrett, Alan & FitzGerald, John & Nolan, Brian, 2002. "Earnings inequality, returns to education and immigration into Ireland," Labour Economics, Elsevier, vol. 9(5), pages 665-680, November.
  2. Flannery, Darragh & O'Donoghue, Cathal, 2009. "The Determinants of Higher Education Participation in Ireland: A Micro Analysis," The Economic and Social Review, Economic and Social Studies, vol. 40(1), pages 73-107.
  3. Card, David, 2001. "Estimating the Return to Schooling: Progress on Some Persistent Econometric Problems," Econometrica, Econometric Society, vol. 69(5), pages 1127-60, September.
  4. Christopher T. Whelan & Damian F. Hannan, 1999. "Class Inequalities in Educational Attainment among the Adult Population in the Republic of Ireland," The Economic and Social Review, Economic and Social Studies, vol. 30(3), pages 285-307.
  5. Gustman, Alan L & Steinmeier, Thomas L, 1981. "The Impact of Wages and Unemployment on Youth Enrollment and Labor Supply," The Review of Economics and Statistics, MIT Press, vol. 63(4), pages 553-60, November.
  6. Peter Haan, 2006. "Much ado about nothing: conditional logit vs. random coefficient models for estimating labour supply elasticities," Applied Economics Letters, Taylor & Francis Journals, vol. 13(4), pages 251-256.
  7. Lisa Sanbonmatsu & Jeffrey R. Kling & Greg J. Duncan & Jeanne Brooks-Gunn, 2006. "Neighborhoods and Academic Achievement: Results from the Moving to Opportunity Experiment," NBER Working Papers 11909, National Bureau of Economic Research, Inc.
  8. Robert J. Willis & Sherwin Rosen, 1978. "Education and Self-Selection," NBER Working Papers 0249, National Bureau of Economic Research, Inc.
  9. Emer Smyth, 1999. "Educational Inequalities Among School Leavers in Ireland 1979-1994," The Economic and Social Review, Economic and Social Studies, vol. 30(3), pages 267-284.
  10. Heckman, James J, 1979. "Sample Selection Bias as a Specification Error," Econometrica, Econometric Society, vol. 47(1), pages 153-61, January.
  11. Stoikov, Vladimir, 1977. "On Some Models of the Educational Decision," Kyklos, Wiley Blackwell, vol. 30(1), pages 74-87.
  12. Colm Harmon & Hessel Oosterbeek, 2000. "The Returns to Education: A Review of Evidence, Issues and Deficiencies in the Literature," CEE Discussion Papers 0005, Centre for the Economics of Education, LSE.
  13. Arne Risa Hole, 2007. "Fitting mixed logit models by using maximum simulated likelihood," Stata Journal, StataCorp LP, vol. 7(3), pages 388-401, September.
  14. Robert Haveman & Barbara Wolfe, 1995. "The Determinants of Children's Attainments: A Review of Methods and Findings," Journal of Economic Literature, American Economic Association, vol. 33(4), pages 1829-1878, December.
  15. Kathryn Wilson & Barbara Wolfe & Robert Haveman, 2005. "The Role of Expectations in Adolescent Schooling Choices: Do Youths Respond to Economic Incentives?," Economic Inquiry, Western Economic Association International, vol. 43(3), pages 467-492, July.
  16. Walker, J.R., 1994. "The Effect of Public Policies on recent Swedish Fertility Behavior," Working papers 9422, Wisconsin Madison - Social Systems.
  17. Cecilia Albert Verdú, 1998. "- Higher Education Demand In Spain: The Influence Of Labour Market Signals And Family Background," Working Papers. Serie EC 1998-17, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  18. Dorothy Watson, 2004. "Living in Ireland Survey - Technical Report and Codebook for Data Users," Papers WP163, Economic and Social Research Institute (ESRI).
  19. Winship C. Fuller & Charles F. Manski & David A. Wise, 1982. "New Evidence on the Economic Determinants of Postsecondary Schooling Choices," Journal of Human Resources, University of Wisconsin Press, vol. 17(4), pages 477-498.
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Blog mentions

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  1. Interesting paper on education choice in Ireland
    by Kevin Denny in Geary Behaviour Centre on 2009-05-25 14:26:00

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