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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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    JEL classification:

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

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