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Testing for Educational Credit Constraints using Heterogeneity in Individual Time Preferences

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  • Benjamin W. Cowan

Abstract

I develop a model in which individual time discount rates have a larger e ect on hu- man capital accumulation when credit constraints are binding. Impatient individuals obtain less schooling when borrowing constraints limit the ability to nance consump- tion during school. Using data from the NLSY79, I show that self-reported measures of time preferences have a signi cantly higher e ect on the college attendance decisions of blacks than those of whites and the decisions of low-income youths than those of high- income youths. These results provide new evidence that members of disadvantaged groups obtain lower levels of schooling because they are credit constrained.

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  • Benjamin W. Cowan, 2014. "Testing for Educational Credit Constraints using Heterogeneity in Individual Time Preferences," Carlo Alberto Notebooks 345, Collegio Carlo Alberto.
    • Handle: RePEc:cca:wpaper:345
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    References listed on IDEAS

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    Cited by:

    1. Christiana Stoddard & Carly Urban, 2020. "The Effects of State‐Mandated Financial Education on College Financing Behaviors," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 52(4), pages 747-776, June.

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    More about this item

    JEL classification:

    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions

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