This file is part of IDEAS, which uses RePEc data


[ Papers | Articles | Software | Books | Chapters | Authors | Institutions | JEL Classification | NEP reports | Search | New papers by email | Author registration | Rankings | Volunteers | FAQ | Blog | Help! ]

Fostering Educational Enrolment Through Subsidies: The Issue of Timing

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
Mario Fiorini () (School of Finance and Economics, University of Technology, Sydney)

Additional information is available for the following registered author(s):

Abstract

In this paper we build a dynamic structural model of educational choices in which cognitive skills shape decisions. The model is estimated by maximum likelihood using cohort data where individuals are observed from birth onwards. These data are unique in that they include cognitive skills test scores collected as early as age 7. We then simulate the e?ect of two educational subsidies equal in cost but different in the timing of disbursement. The ?rst consists of grants assigned directly to individuals aged between 16 and 18. The second is assigned to the parents earlier on, when the cohort is still in its childhood. The latter subsidy affects cognitive skills accumulation and in turn educational choices. Our results suggest that a direct grant in the form of a tuition subsidy might be more efficient even in the absence of short term ?nancial constraints. Although cognitive skills accumulated during childhood play a key role in the educational decisions, an unconditional ?nancial subsidy to parents is not the best policy. The results do not call a halt to investments in cognitive skill accumulation during childhood, but recommend that such investments should be well structured and ensure a high return.

Download Info
To download:

If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.business.uts.edu.au/finance/research/wpapers/wp157.pdf
File Format: application/pdf
File Function:
Download Restriction: no

Publisher Info
Paper provided by School of Finance and Economics, University of Technology, Sydney in its series Working Paper Series with number 157.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length: 32
Date of creation: 01 May 2008
Date of revision:
Handle: RePEc:uts:wpaper:157

Contact details of provider:
Postal: PO Box 123, Broadway, NSW 2007, Australia
Phone: +61 2 9514 7777
Fax: +61 2 9514 7711
Web page: http://www.business.uts.edu.au/finance/
More information through EDIRC

For technical questions regarding this item, or to correct its listing, contact: (Duncan Ford).

Related research
Keywords: educational decisions; dynamic structural estimation; tuition subsidy; parental income subsidy;

Other versions of this item:

Find related papers by JEL classification:
I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
I28 - Health, Education, and Welfare - - Education - - - Government Policy
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

This paper has been announced in the following NEP Reports:

References listed on IDEAS
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.:
  1. Donghoon Lee, 2005. "An Estimable Dynamic General Equilibrium Model Of Work, Schooling, And Occupational Choice," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 46(1), pages 1-34, 02. [Downloadable!] (restricted)
  2. Hidehiko Ichimura & Christopher Taber, 2002. "Semiparametric Reduced-Form Estimation of Tuition Subsidies," American Economic Review, American Economic Association, vol. 92(2), pages 286-292, May. [Downloadable!]
    Other versions:
  3. Flavio Cunha & James J. Heckman, 2007. "The Technology of Skill Formation," IZA Discussion Papers 2550, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  4. Stephen V. Cameron & James J. Heckman, 2001. "The Dynamics of Educational Attainment for Black, Hispanic, and White Males," Journal of Political Economy, University of Chicago Press, vol. 109(3), pages 455-499, June. [Downloadable!] (restricted)
  5. Lorraine Dearden & Leslie McGranahan & Barbara Sianesi, 2004. "The Role of Credit Constraints in Educational Choices: Evidence from NCDS and BCS70," CEE Discussion Papers 0048, Centre for the Economics of Education, LSE. [Downloadable!]
  6. 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. [Downloadable!] (restricted)
  7. Heckman, James & Singer, Burton, 1984. "A Method for Minimizing the Impact of Distributional Assumptions in Econometric Models for Duration Data," Econometrica, Econometric Society, vol. 52(2), pages 271-320, March. [Downloadable!] (restricted)
  8. Gordon B. Dahl & Lance Lochner, 2005. "The Impact of Family Income on Child Achievement," NBER Working Papers 11279, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  9. Belzil, Christian & Hansen, Jörgen, 2002. "Unobserved Ability and the Return to Schooling," IZA Discussion Papers 508, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  10. James J. Heckman & Jora Stixrud & Sergio Urzua, 2006. "The Effects of Cognitive and Noncognitive Abilities on Labor Market Outcomes and Social Behavior," NBER Working Papers 12006, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  11. John M. Barron & Mark C. Berger & Dan A. Black, 2006. "Selective Counteroffers," Journal of Labor Economics, University of Chicago Press, vol. 24(3), pages 385-410, July. [Downloadable!]
  12. Heckman, James J & Lochner, Lance & Taber, Christopher, 1998. "General-Equilibrium Treatment Effects: A Study of Tuition Policy," American Economic Review, American Economic Association, vol. 88(2), pages 381-86, May. [Downloadable!] (restricted)
    Other versions:
  13. Peter Arcidiacono & John Bailey Jones, 2003. "Finite Mixture Distributions, Sequential Likelihood and the EM Algorithm," Econometrica, Econometric Society, vol. 71(3), pages 933-946, 05. [Downloadable!] (restricted)
    Other versions:
  14. Peter Arcidiacono, 2005. "Affirmative Action in Higher Education: How Do Admission and Financial Aid Rules Affect Future Earnings?," Econometrica, Econometric Society, vol. 73(5), pages 1477-1524, 09. [Downloadable!] (restricted)
  15. 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.
  16. Pedro Carneiro & James J. Heckman, 2002. "The Evidence on Credit Constraints in Post-Secondary Schooling," NBER Working Papers 9055, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  17. Gavan Conlon, 2001. "The differential in earnings premia between academically and vocationally trained males in the United Kingdom," CEE Discussion Papers 0011, Centre for the Economics of Education, LSE. [Downloadable!]
  18. Keane, Michael P & Wolpin, Kenneth I, 1997. "The Career Decisions of Young Men," Journal of Political Economy, University of Chicago Press, vol. 105(3), pages 473-522, June.
    Other versions:
  19. Petra E. Todd & Kenneth I. Wolpin, 2003. "On The Specification and Estimation of The Production Function for Cognitive Achievement," Economic Journal, Royal Economic Society, vol. 113(485), pages F3-F33, February. [Downloadable!] (restricted)
  20. Thierry Magnac & David Thesmar, 2002. "Identifying Dynamic Discrete Decision Processes," Econometrica, Econometric Society, vol. 70(2), pages 801-816, March. [Downloadable!] (restricted)
Full references

Statistics
Access and download statistics

Did you know? A tutorial is available.

This page was last updated on 2009-11-12.

This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.