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Expanding Access to Selective Colleges

Author

Listed:
  • Lutz Hendricks
  • Tatyana Koreshkova
  • Oksana Leukhina

Abstract

This paper studies the effects of expanding high-quality public university capacities. 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 2.2 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. These earnings gains are eight times larger than the fiscal cost of financing the expansion. Our findings remain robust when we account for peer effects in student learning.

Suggested Citation

  • Lutz Hendricks & Tatyana Koreshkova & Oksana Leukhina, 2026. "Expanding Access to Selective Colleges," Working Papers 2026-005, Federal Reserve Bank of St. Louis, revised 13 Jun 2026.
    • Handle: RePEc:fip:fedlwp:102965
    DOI: 10.20955/wp.2026.005
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    References listed on IDEAS

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    4. 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.
    5. Bound, John & Turner, Sarah, 2011. "Dropouts and Diplomas," Handbook of the Economics of Education, in: Erik Hanushek & Stephen Machin & Ludger Woessmann (ed.), Handbook of the Economics of Education, edition 1, volume 4, chapter 0, pages 573-613, Elsevier.
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    Keywords

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    JEL classification:

    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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