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Peer effects, financial aid and selection of students into colleges and universities: an empirical analysis

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Listed:
  • Holger Sieg

    (Carnegie Mellon University, Pittsburgh, PA 15213-3890 and NBER, USA)

  • Dennis Epple

    (Carnegie Mellon University, Pittsburgh, PA 15213-3890 and NBER, USA)

  • Richard Romano

    (University of Florida, Florida, USA)

Abstract

This paper develops a model in which colleges seek to maximize the quality of the educational experience provided to their students. We deduce predictions about the hierarchy of schools that emerges in equilibrium, the allocation of students by income and ability among schools, and about the pricing policies that schools adopt. The empirical findings of this paper suggest that there is a hierarchy of school qualities which is characterized by substantial stratification by income and ability. The evidence on pricing by ability is supportive of positive peer effects in educational achievement from high ability at the college level. Copyright © 2003 John Wiley & Sons, Ltd.

Suggested Citation

  • Holger Sieg & Dennis Epple & Richard Romano, 2003. "Peer effects, financial aid and selection of students into colleges and universities: an empirical analysis," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 18(5), pages 501-525.
  • Handle: RePEc:jae:japmet:v:18:y:2003:i:5:p:501-525
    DOI: 10.1002/jae.737
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    References listed on IDEAS

    as
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    More about this item

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models

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