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The Relationship Between Family Income and Schooling Attainment: Evidence from a Liberal Arts College with a Full Tuition Subsidy Program

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Abstract

Researchers have long been interested in understanding why a Strong relationship between family income and educational attainment exists at virtually all levels of schooling. In part due to a recent increase in the disparity between the wages of college graduates and the wages of individuals with less than a college degree, there has been a specific interest in understanding why individuals from low income families are less likely to graduate from college than other students. Using unique new data obtained directly from a liberal arts school that maintains a full tuition subsidy program, this paper provides direct evidence that family environment reasons that are unrelated to the tuition costs of college are very important. The paper pays close attention to the issue of selection bias by deriving a set of seemingly very plausible conditions under which the estimator of interest is "conservative". The findings, which suggest that non-trivial differences in educational attainment would exist even if tuition was zero for all students, have implications for expensive policy programs such as the full tuition subsidy program that was recently approved by the state of California.

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Bibliographic Info

Paper provided by University of Western Ontario, Department of Economics in its series UWO Department of Economics Working Papers with number 20008.

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Date of creation: 2000
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Handle: RePEc:uwo:uwowop:20008

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Postal: Department of Economics, Reference Centre, Social Science Centre, University of Western Ontario, London, Ontario, Canada N6A 5C2
Phone: 519-661-2111 Ext.85244
Web page: http://economics.uwo.ca/research/research_papers/department_working_papers.html

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  1. Steven Stern & Victor Lavy & Michael Palumbo, 1998. "Simulation of Multinomial Probit Probabilities and Imputation of Missing Data," Virginia Economics Online Papers 388, University of Virginia, Department of Economics.
  2. David Card & Alan Krueger, 1990. "Does School Quality Matter? Returns to Education and the Characteristics of Public Schools in the United States," Working Papers 645, Princeton University, Department of Economics, Industrial Relations Section..
  3. Loury, Linda Datcher & Garman, David, 1995. "College Selectivity and Earnings," Journal of Labor Economics, University of Chicago Press, vol. 13(2), pages 289-308, April.
  4. Hungerford, Thomas & Solon, Gary, 1987. "Sheepskin Effects in the Returns to Education," The Review of Economics and Statistics, MIT Press, vol. 69(1), pages 175-77, February.
  5. Belman, Dale & Heywood, John S, 1997. "Sheepskin Effects by Cohort: Implications of Job Matching in a Signaling Model," Oxford Economic Papers, Oxford University Press, vol. 49(4), pages 623-37, October.
  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.
  7. Belman, Dale & Heywood, John S, 1991. "Sheepskin Effects in the Returns to Education: An Examination on Women and Minorities," The Review of Economics and Statistics, MIT Press, vol. 73(4), pages 720-24, November.
  8. James J. Heckman & Lance Lochner & Christopher Taber, 1998. "General Equilibrium Treatment Effects: A Study of Tuition Policy," NBER Working Papers 6426, National Bureau of Economic Research, Inc.
  9. Robert H. Haveman & Barbara L. Wolfe, 1984. "Schooling and Economic Well-Being: The Role of Nonmarket Effects," Journal of Human Resources, University of Wisconsin Press, vol. 19(3), pages 377-407.
  10. Taubman, Paul, 1989. "Role of Parental Income in Educational Attainment," American Economic Review, American Economic Association, vol. 79(2), pages 57-61, May.
  11. Lazear, Edward P, 1977. "Education: Consumption or Production?," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 569-97, June.
  12. James J. Heckman & Lance Lochner & Christopher Taber, 1998. "Tax Policy and Human Capital Formation," NBER Working Papers 6462, National Bureau of Economic Research, Inc.
  13. repec:fth:prinin:338 is not listed on IDEAS
  14. Heywood, John S., 1994. "How widespread are sheepskin returns to education in the U.S.?," Economics of Education Review, Elsevier, vol. 13(3), pages 227-234, September.
  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. repec:att:wimass:9110 is not listed on IDEAS
  17. B. F. Kiker & C. M. Condon, 1981. "The Influence of Socioeconomic Background on the Earnings of Young Men," Journal of Human Resources, University of Wisconsin Press, vol. 16(1), pages 94-105.
  18. Patrinos, Harry Anthony, 1995. "Socioeconomic background, schooling, experience, ability and monetary rewards in Greece," Economics of Education Review, Elsevier, vol. 14(1), pages 85-91, March.
  19. Charles F. Manski, 1993. "Adolescent Econometricians: How Do Youth Infer the Returns to Schooling?," NBER Chapters, in: Studies of Supply and Demand in Higher Education, pages 43-60 National Bureau of Economic Research, Inc.
  20. Todd R. Stinebrickner, 1999. "Estimation Of A Duration Model In The Presence Of Missing Data," The Review of Economics and Statistics, MIT Press, vol. 81(3), pages 529-542, August.
  21. Jin Huem Park, 1994. "Estimation of Sheepskin Effects and Returns to Schooling Using he Old and the New CPS Measures of Educational Attainment," Working Papers 717, Princeton University, Department of Economics, Industrial Relations Section..
  22. Murphy, Kevin M & Welch, Finis, 1992. "The Structure of Wages," The Quarterly Journal of Economics, MIT Press, vol. 107(1), pages 285-326, February.
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Cited by:
  1. Ralph Stinebrickner & Todd R. Stinebrickner, 2003. "Working during School and Academic Performance," Journal of Labor Economics, University of Chicago Press, vol. 21(2), pages 449-472, April.
  2. Diego Restuccia & Carlos Urrutia, 2002. "Intergenerational Persistence of Earnings: The Role of Early and College Education," Working Papers diegor-02-03, University of Toronto, Department of Economics.
  3. Ana Hidalgo-Cabrillana, 2004. "Does Asymmetric Information Promote Talented People?," Economics Working Papers we042809, Universidad Carlos III, Departamento de Economía.
  4. Su Jin Jez, 2008. "The Influence of Wealth and Race in Four-Year College Attendance," University of California at Berkeley, Center for Studies in Higher Education qt0cc2x5tj, Center for Studies in Higher Education, UC Berkeley.

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