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Abstract

We document the growth in higher education costs and tuition over the past 50 years. To explain these trends, we develop a general equilibrium model with skill- and sector-biased technical change. We assume that higher education suffers from Baumol's (1967) service sector disease, in that the quantity of labor and capital needed to educate a student is constant over time. Finding the model's parameters through a combination of calibration and estimation, we show that it can explain the rise in college costs between 1961 and 2009, along with the increase in college attainment and the increase in the relative earnings of college graduates. We finish by using the model to perform a number of numerical experiments.

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File URL: http://www.albany.edu/economics/research/workingp/2012/jonesandyang.pdf
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Bibliographic Info

Paper provided by University at Albany, SUNY, Department of Economics in its series Discussion Papers with number 12-08.

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Date of creation: 2012
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Handle: RePEc:nya:albaec:12-08

Contact details of provider:
Postal: Department of Economics, BA 110 University at Albany State University of New York Albany, NY 12222 U.S.A.
Phone: (518) 442-4735
Fax: (518) 442-4736

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Postal: Department of Economics, BA 110 University at Albany State University of New York Albany, NY 12222 U.S.A.
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Web: http://www.albany.edu/economics/research/workingp/index.shtml

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This paper has been announced in the following NEP Reports:

• NEP-ALL-2012-11-11 (All new papers)
• NEP-DGE-2012-11-11 (Dynamic General Equilibrium)
• NEP-EDU-2012-11-11 (Education)
• NEP-LAB-2012-11-11 (Labour Economics)

References

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

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16. Babcock, Phillip & Marks, Mindy, 2010. "Leisure College, Usa," University of California at Santa Barbara, Economics Working Paper Series qt1zd0q0vn, Department of Economics, UC Santa Barbara.
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18. Philip Babcock, 2010. "Real Costs Of Nominal Grade Inflation? New Evidence From Student Course Evaluations," Economic Inquiry, Western Economic Association International, vol. 48(4), pages 983-996, October.

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