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A Structural Model of Educational Attainment in Canada

Author

Listed:
  • Hansen, Jörgen

    (Concordia University)

  • Liu, Xingfei

    (University of Alberta)

Abstract

In this paper, we develop and estimate a structural, dynamic model of schooling decisions using data extracted from the Canadian Youth in Transition Survey (YITS). The model incorporates forward-looking behavior and expectations about future benefits from investing in education. The results suggest that the effect of an increase in parental income on educational attainment is modest. For example, a 25 percent increase in parental income is predicted to increase post-secondary education (PSE) attendance by one percent only. However, our results indicate that financial resources, other than parental income, play a role in PSE enrollment. In particular, our model predicts that an increase in PSE tuition fees by $2,500 per grade level (for grade 13 and above) will reduce attendance in these grades by almost 9 percentage points for males and by 6.5 percentage points for females. We also simulate the impacts of changes in Programme for International Student Assessment (PISA) reading scores. Specifically, an increase of test scores with one standard deviation (which is comparable to the difference in average score for high school drop-outs and those with some PSE) increases PSE attendance by 10.2 percentage points for males and by 6.6 percentage points for females. At the same time, high school dropout rates are predicted to fall by 3.2 percentage points for males and by 2.8 percentage points for females. We also take advantage of the dynamics of the model and explore how a 25 percent increase in future wages for PSE students will affect current schooling decisions. This leads to an increase in PSE attendance by 2.2 percentage points for males and by 3.1 percentage points for females.

Suggested Citation

  • Hansen, Jörgen & Liu, Xingfei, 2013. "A Structural Model of Educational Attainment in Canada," IZA Discussion Papers 7237, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp7237
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    References listed on IDEAS

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    1. Keane, Michael P & Wolpin, Kenneth I, 1997. "The Career Decisions of Young Men," Journal of Political Economy, University of Chicago Press, vol. 105(3), pages 473-522, June.
    2. Maud Rivard & Mélanie Raymond, "undated". "The Effect of Tuition Fees on Post-secondary Education in Canada in the late 1990s," Working Papers-Department of Finance Canada 2004-09, Department of Finance Canada.
    3. Lauer, Charlotte, 2003. "Family background, cohort and education: A French-German comparison based on a multivariate ordered probit model of educational attainment," Labour Economics, Elsevier, vol. 10(2), pages 231-251, April.
    4. Kenneth I. Wolpin & Petra E. Todd, 2006. "Assessing the Impact of a School Subsidy Program in Mexico: Using a Social Experiment to Validate a Dynamic Behavioral Model of Child Schooling and Fertility," American Economic Review, American Economic Association, vol. 96(5), pages 1384-1417, December.
    5. Michael P. Keane, 2010. "A Structural Perspective on the Experimentalist School," Journal of Economic Perspectives, American Economic Association, vol. 24(2), pages 47-58, Spring.
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    Cited by:

    1. Christian Belzil & Arnaud Maurel & Modibo Sidibé, 2021. "Estimating the Value of Higher Education Financial Aid: Evidence from a Field Experiment," Journal of Labor Economics, University of Chicago Press, vol. 39(2), pages 361-395.

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    More about this item

    Keywords

    educational attainment; structural estimation; forward-looking behavior; parental income; tuition fees; cognitive ability;
    All these keywords.

    JEL classification:

    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education

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