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The Evidence on Credit Constraints in Post-Secondary Schooling

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  • Pedro Carneiro
  • James J. Heckman

Abstract

This paper examines the family income -- college enrollment relationship and the evidence on credit constraints in post-secondary schooling. We distinguish short-run liquidity constraints from the long-term factors that promote cognitive and noncognitive ability. Long-run factors crystallized in ability are the major determinants of the family income -- schooling relationship, although there is some evidence that up to 8% of the U.S. population is credit constrained in a short-run sense. Evidence that IV estimates of the returns to schooling exceed OLS estimates is sometimes claimed to support the existence of substantial credit constraints. This argument is critically examined.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 9055.

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Date of creation: Jul 2002
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Handle: RePEc:nbr:nberwo:9055

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  1. Carneiro, Pedro & Heckman, James J. & Vytlacil, Edward, 2010. "Estimating Marginal Returns to Education," IZA Discussion Papers 5275, Institute for the Study of Labor (IZA).
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  7. Carneiro, Pedro & Hansen, Karsten T. & Heckman, James J., 2002. "Removing the Veil of Ignorance in Assessing the Distributional Impacts of Social Policies," IZA Discussion Papers 453, Institute for the Study of Labor (IZA).
  8. Stephen V. Cameron & James J. Heckman, 1998. "Life Cycle Schooling and Dynamic Selection Bias: Models and Evidence for Five Cohorts of American Males," Journal of Political Economy, University of Chicago Press, vol. 106(2), pages 262-333, April.
  9. Dan A. Black & Jeffrey Smith, 2003. "How Robust is the Evidence on the Effects of College Quality? Evidence From Matching," University of Western Ontario, CIBC Centre for Human Capital and Productivity Working Papers 20033, University of Western Ontario, CIBC Centre for Human Capital and Productivity.
  10. Karsten Hansen & James J. Heckman & Kathleen J. Mullen, 2003. "The Effect of Schooling and Ability on Achievement Test Scores," NBER Working Papers 9881, National Bureau of Economic Research, Inc.
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  12. James J. Heckman & Edward Vytlacil, 2005. "Structural Equations, Treatment Effects and Econometric Policy Evaluation," NBER Technical Working Papers 0306, National Bureau of Economic Research, Inc.
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  22. Altonji, Joseph G & Dunn, Thomas A, 1996. "The Effects of Family Characteristics on the Return to Education," The Review of Economics and Statistics, MIT Press, vol. 78(4), pages 692-704, November.
  23. Dynarski, Susan, 2000. "Hope for Whom? Financial Aid for the Middle Class and Its Impact on College Attendance," National Tax Journal, National Tax Association, vol. 53(n. 3), pages 629-62, September.
  24. Griliches, Zvi, 1977. "Estimating the Returns to Schooling: Some Econometric Problems," Econometrica, Econometric Society, vol. 45(1), pages 1-22, January.
  25. Edward Vytlacil, 2002. "Independence, Monotonicity, and Latent Index Models: An Equivalence Result," Econometrica, Econometric Society, vol. 70(1), pages 331-341, January.
  26. Keane, Michael P & Wolpin, Kenneth I, 2001. "The Effect of Parental Transfers and Borrowing Constraints on Educational Attainment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 42(4), pages 1051-1103, November.
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