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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. 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).
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  3. 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.
  4. Lance J. Lochner & Alexander Monge-Naranjo, 2011. "The Nature of Credit Constraints and Human Capital," American Economic Review, American Economic Association, vol. 101(6), pages 2487-2529, October.
  5. Pedro Carneiro & James J. Heckman & Edward Vytlacil, 2010. "Evaluating Marginal Policy Changes and the Average Effect of Treatment for Individuals at the Margin," Econometrica, Econometric Society, vol. 78(1), pages 377-394, 01.
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  12. Pedro Carneiro & James J. Heckman & Edward J. Vytlacil, 2011. "Estimating Marginal Returns to Education," American Economic Review, American Economic Association, vol. 101(6), pages 2754-2781, October.
  13. David Card, 1994. "Earnings, Schooling, and Ability Revisited," Working Papers 710, Princeton University, Department of Economics, Industrial Relations Section..
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  23. repec:fth:prinin:331 is not listed on IDEAS
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