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Credit Constraints in Higher Education in a Context of Unobserved Heterogeneity

Listed author(s):
  • Villena, Mauricio
  • Sanchez, Rafael
  • Rojas, Eugenio

This article tests the existence of credit constraints on higher education access by estimating actual marginal returns in the context of unobserved heterogeneity. We estimate higher education returns for those who attend to it and compare them with those of individuals who are at the margin of attending to it. Following the Carneiro and Heckman (2002) reasoning, if the returns of the latter group are larger than those of the former one we could be in presence of unobservable barriers to higher education access, such as credit constraints. We use a rich administrative database composed from three sources: data of enrollment and graduation from the Chilean higher education system, test scores and labor market outcomes from the Chilean Unemployment Insurance database. Our results suggest that, given the existing financial aid scheme, the returns for those individuals that are at the margin of attending to higher education are lower than for those who decided to attend to it. This is, no evidence of credit constraints is found for the Chilean Higher Education system. However, when conditioning on family income, we find that for the richer households some evidence of credit constraints is found.

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File URL: https://mpra.ub.uni-muenchen.de/62095/1/MPRA_paper_62095.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 62095.

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Date of creation: 23 Apr 2012
Date of revision: 08 Jul 2014
Handle: RePEc:pra:mprapa:62095
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  1. Loreto Reyes & Jorge Rodríguez & Sergio S. Urzúa, 2013. "Heterogeneous Economic Returns to Postsecondary Degrees: Evidence from Chile," NBER Working Papers 18817, National Bureau of Economic Research, Inc.
  2. Imbens, Guido W & Angrist, Joshua D, 1994. "Identification and Estimation of Local Average Treatment Effects," Econometrica, Econometric Society, vol. 62(2), pages 467-475, March.
  3. Carneiro, Pedro & Heckman, James J., 2002. "The Evidence on Credit Constraints in Post-Secondary Schooling," IZA Discussion Papers 518, Institute for the Study of Labor (IZA).
  4. Pedro Carneiro & James Heckman & Edward Vytlacil, 2010. "Estimating marginal returns to education," CeMMAP working papers CWP29/10, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  5. James J. Heckman & Sergio Urzua & Edward J. Vytlacil, 2006. "Understanding Instrumental Variables in Models with Essential Heterogeneity," NBER Working Papers 12574, National Bureau of Economic Research, Inc.
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  7. Christopher R. Taber, 2001. "The Rising College Premium in the Eighties: Return to College or Return to Unobserved Ability?," Review of Economic Studies, Oxford University Press, vol. 68(3), pages 665-691.
  8. repec:fth:prinin:331 is not listed on IDEAS
  9. Pedro Carneiro & James J. Heckman & Edward J. Vytlacil, 2009. "Evaluating Marginal Policy Changes and the Average Effect of Treatment for Individuals at the Margin," NBER Working Papers 15211, National Bureau of Economic Research, Inc.
  10. Stephen V. Cameron & James J. Heckman, 1998. "Life Cycle Schooling and Dynamic Selection Bias: Models and Evidence for Five Cohorts," NBER Working Papers 6385, National Bureau of Economic Research, Inc.
  11. Lance J. Lochner, 2009. "The Nature of Credit Constraints and Human Capital," 2009 Meeting Papers 745, Society for Economic Dynamics.
  12. James J. Heckman & Edward Vytlacil, 2005. "Structural Equations, Treatment Effects and Econometric Policy Evaluation," NBER Working Papers 11259, National Bureau of Economic Research, Inc.
  13. David Card, 1994. "Earnings, Schooling, and Ability Revisited," Working Papers 710, Princeton University, Department of Economics, Industrial Relations Section..
  14. Willis, Robert J & Rosen, Sherwin, 1979. "Education and Self-Selection," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 7-36, October.
  15. Heckman, James J. & Robb, Richard Jr., 1985. "Alternative methods for evaluating the impact of interventions : An overview," Journal of Econometrics, Elsevier, vol. 30(1-2), pages 239-267.
  16. Stephen V. Cameron & Christopher Taber, 2004. "Estimation of Educational Borrowing Constraints Using Returns to Schooling," Journal of Political Economy, University of Chicago Press, vol. 112(1), pages 132-182, February.
  17. Kane, Thomas J & Rouse, Cecilia Elena, 1995. "Labor-Market Returns to Two- and Four-Year College," American Economic Review, American Economic Association, vol. 85(3), pages 600-614, June.
  18. A. D. Roy, 1951. "Some Thoughts On The Distribution Of Earnings," Oxford Economic Papers, Oxford University Press, vol. 3(2), pages 135-146.
  19. Stephen V. Cameron & James J. Heckman, 1998. "Life Cycle Schooling and Dynamic Selection Bias: Models and Evidence for Five Cohorts of American Males," Journal of Political Economy, University of Chicago Press, vol. 106(2), pages 262-333, April.
  20. Edward Vytlacil & James J. Heckman, 2001. "Policy-Relevant Treatment Effects," American Economic Review, American Economic Association, vol. 91(2), pages 107-111, May.
  21. Thomas J. Kane, 2007. "Evaluating the Impact of the D.C. Tuition Assistance Grant Program," Journal of Human Resources, University of Wisconsin Press, vol. 42(3).
  22. Stephen V. Cameron & James J. Heckman, 2001. "The Dynamics of Educational Attainment for Black, Hispanic, and White Males," Journal of Political Economy, University of Chicago Press, vol. 109(3), pages 455-499, June.
  23. Tomás Rau & Eugenio Rojas & Sergio Urzúa, 2013. "Loans for Higher Education: Does the Dream Come True?," NBER Working Papers 19138, National Bureau of Economic Research, Inc.
  24. Katja Maria Kaufmann, 2014. "Understanding the income gradient in college attendance in Mexico: The role of heterogeneity in expected returns," Quantitative Economics, Econometric Society, vol. 5(3), pages 583-630, November.
  25. David Card, 2000. "Estimating the Return to Schooling: Progress on Some Persistent Econometric Problems," NBER Working Papers 7769, National Bureau of Economic Research, Inc.
  26. Thomas J. Kane, 1996. "College Cost, Borrowing Constraints and the Timing of College Entry," Eastern Economic Journal, Eastern Economic Association, vol. 22(2), pages 181-194, Spring.
  27. James Heckman & Hidehiko Ichimura & Jeffrey Smith & Petra Todd, 1998. "Characterizing Selection Bias Using Experimental Data," NBER Working Papers 6699, National Bureau of Economic Research, Inc.
  28. Robinson, Peter M, 1988. "Root- N-Consistent Semiparametric Regression," Econometrica, Econometric Society, vol. 56(4), pages 931-954, July.
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