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Skill-Biased Technical Change and the Cost of Higher Education

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  • John Bailey Jones
  • Fang Yang

Abstract

We document the growth in higher education costs and tuition over the past 50 years. To explain these trends, we develop a general equilibrium model with skill- and sector-biased technical change. Finding the model's parameters through a combination of estimation and calibration, we show that it can explain the rise in college costs between 1961 and 2009, along with the increase in college attainment and the change in the relative earnings of college graduates. The model predicts that if college costs had ceased to grow after 1961, enrollment in 2010 would have been 3%–6% higher.

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  • John Bailey Jones & Fang Yang, 2016. "Skill-Biased Technical Change and the Cost of Higher Education," Journal of Labor Economics, University of Chicago Press, vol. 34(3), pages 621-662.
  • Handle: RePEc:ucp:jlabec:doi:10.1086/684856
    DOI: 10.1086/684856
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    Cited by:

    1. Zhifeng Cai & Jonathan Heathcote, 2018. "College Tuition and Income Inequality," Staff Report 569, Federal Reserve Bank of Minneapolis.
    2. Kevin Donovan & Christopher Herrington, 2019. "Factors Affecting College Attainment and Student Ability in the U.S. since 1900," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 31, pages 224-244, January.
    3. Lance Lochner & Alexander Monge-Naranjo, 2014. "Student Loans and Repayment: Theory, Evidence and Policy," Working Papers 2014-40, Federal Reserve Bank of St. Louis.
    4. Grey Gordon & Aaron Hedlund, 2017. "Accounting for the Rise in College Tuition," NBER Chapters, in: Education, Skills, and Technical Change: Implications for Future US GDP Growth, pages 357-394, National Bureau of Economic Research, Inc.
    5. Xiaoxiao Zhou & Ming Xia & Teng Zhang & Juntao Du, 2020. "Energy- and Environment-Biased Technological Progress Induced by Different Types of Environmental Regulations in China," Sustainability, MDPI, Open Access Journal, vol. 12(18), pages 1-26, September.
    6. Matsuda, Kazushige, 2020. "Optimal timing of college subsidies: Enrollment, graduation, and the skill premium," European Economic Review, Elsevier, vol. 129(C).

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