Assets and Job Choice: Student Debt, Wages, and Job Satisfaction

Higher student debt causes college students to take jobs with higher wages and lower job satisfaction. We arrive at this finding using representative samples of college graduates and exploiting variation in financial aid policies to identify the causal effect of debts on job choices. When we extend the search with asset framework of Lise (2013) to accommodate non-pecuniary amenities the model matches our empirical findings: higher debt tilts acceptance policies toward high wage, low satisfaction jobs. In a quantitative extension we identify the utility value of amenities through observed search behavior conditional on reported satisfaction and income, finding that high satisfaction jobs are valued at 6 percent of lifetime consumption relative to low satisfaction jobs. This trade-off is large enough that computing welfare gains in a counterfactual income-based repayment policy using only wages leads to a mistaken inference that students prefer a fixed repayment policy.