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The slowdown in American educational attainment

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  • Keller, Elisa

Abstract

Relative to those for high school graduates, lifetime earnings for college graduates are higher for more recent cohorts. At the same time, across successive cohorts born after 1950, there is a stagnation in the fraction of high school graduates that go on to complete a college degree. What explains this phenomenon? I formulate a life-cycle model of human capital accumulation in college and on the job, where successive cohorts decide whether or not to acquire a college degree as well as the quality of their college education. Cohorts differ by the sequence of rental price per unit of human capital they face and by the distribution of initial human capital across individuals. My model reproduces the observed pattern in college attainment for the 1920–1970 birth cohorts. The stagnation in college attainment is due to the decrease in the growth rate of the rental price per unit of human capital commencing in the 1970s. My model also generates about 80% of the increase in lifetime earnings for college graduates relative to those for high school graduates observed across cohorts.

Suggested Citation

  • Keller, Elisa, 2014. "The slowdown in American educational attainment," Journal of Economic Dynamics and Control, Elsevier, vol. 46(C), pages 252-270.
  • Handle: RePEc:eee:dyncon:v:46:y:2014:i:c:p:252-270
    DOI: 10.1016/j.jedc.2014.07.007
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    1. repec:red:issued:17-9 is not listed on IDEAS
    2. Kong, Y.-C. & Ravikumar, B. & Vandenbroucke, G., 2018. "Explaining cross-cohort differences in life-cycle earnings," European Economic Review, Elsevier, vol. 107(C), pages 157-184.
    3. Kevin Donovan & Christopher Herrington, . "Factors Affecting College Attainment and Student Ability in the U.S. since 1900," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics.

    More about this item

    Keywords

    Education; College attainment; Human capital; Earnings growth;

    JEL classification:

    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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