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Expanding College Access

Author

Listed:
  • Lutz Hendricks
  • Tatyana Koreshkova
  • Oksana Leukhina

Abstract

This paper studies the effects of expanding high-quality public university capacities on student earnings and welfare. Using a quantitative model of college choice, we find that expanding the most selective colleges by 20 percent increases aggregate earnings by 0.8 percent and welfare by 2 percent. The gains arise because a large number of high-ability students are rationed out of selective colleges. When admitted, these students graduate at high rates and enjoy substantial earnings gains. The earnings gains generated by expanding college capacity are eight times larger than the fiscal cost of financing it. These findings remain robust when we account for peer effects in learning and general equilibrium changes in the college wage premium.

Suggested Citation

  • Lutz Hendricks & Tatyana Koreshkova & Oksana Leukhina, 2026. "Expanding College Access," Working Papers 2026-005, Federal Reserve Bank of St. Louis.
    • Handle: RePEc:fip:fedlwp:102965
    DOI: 10.20955/wp.2026.005
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    References listed on IDEAS

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    1. Gabriel Chodorow-Reich & Owen Zidar & Eric Zwick, 2024. "Lessons from the Biggest Business Tax Cut in US History," Journal of Economic Perspectives, American Economic Association, vol. 38(3), pages 61-88, Summer.
    2. Sandra E. Black & Jeffrey T. Denning & Jesse Rothstein, 2023. "Winners and Losers? The Effect of Gaining and Losing Access to Selective Colleges on Education and Labor Market Outcomes," American Economic Journal: Applied Economics, American Economic Association, vol. 15(1), pages 26-67, January.
    3. Chinhui Juhn & Dae Il Kim & Francis Vella, 2005. "The Expansion of College Education in the United States: Is There Evidence of Declining Cohort Quality?," Economic Inquiry, Western Economic Association International, vol. 43(2), pages 303-315, April.
    4. Robert B. Archibald & David H. Feldman & Peter McHenry, 2015. "A Quality-Preserving Increase in Four-Year College Attendance," Journal of Human Capital, University of Chicago Press, vol. 9(3), pages 265-297.
    5. Dennis Epple & Richard Romano & Holger Sieg, 2006. "Admission, Tuition, and Financial Aid Policies in the Market for Higher Education," Econometrica, Econometric Society, vol. 74(4), pages 885-928, July.
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    Keywords

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    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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