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Participation in Higher Education: A Random Parameter Logit Approach with Policy Simulations

Author

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  • Flannery, Darragh

    () (University of Limerick)

  • O'Donoghue, Cathal

    () (Maastricht University)

Abstract

In this paper we present a theoretical model of higher education participation. We assume that young people that complete upper secondary education are faced with three choices, go to higher education, not go to higher education or go to higher education and work part time. Utilizing the Living in Ireland survey data 1994-2001 we model this choice in an Irish context by variation in costs (direct and indirect), the estimated lifecycle returns and household credit constraints. Using a random parameters logit choice model we find that simulated lifecycle earnings positively impact the educational/labour choices of young individuals in Ireland. This positive relationship is also found to be true for a choice-specific household income variable constructed in the paper. From the random parameters logit estimations we also find that preferences for choices with higher simulated lifecycle earnings and household income vary across individuals. We conduct policy simulations from our estimations and found that increasing student financial aid levels by 10% combined with a slight widening of the income limits for these aids can lead to significant movement away from the decision to not enter higher education.

Suggested Citation

  • Flannery, Darragh & O'Donoghue, Cathal, 2009. "Participation in Higher Education: A Random Parameter Logit Approach with Policy Simulations," IZA Discussion Papers 4163, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp4163
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    References listed on IDEAS

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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Interesting paper on education choice in Ireland
      by Kevin Denny in Geary Behaviour Centre on 2009-05-25 19:26:00

    More about this item

    Keywords

    higher education participation; random parameters logit model; lifecycle simulated earnings; higher education policy;

    JEL classification:

    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions

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