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College Attrition and the Dynamics of Information Revelation

Author

Listed:
  • Tyler Ransom

    (Duke University)

  • Esteban Aucejo

    (London School of Economics)

  • Arnaud Maurel

    (Duke University)

  • Peter Arcidiacono

    (Duke University)

Abstract

This paper investigates the determinants of college attrition in a setting where individuals have imperfect information about their schooling ability and labor market productivity. We estimate, a dynamic structural model of schooling and work decisions, where high school graduates choose a bundle of education and work combinations. We take into account the heterogeneity in schooling investments by distinguishing between two-, four-year colleges and graduate school, as well as science and non-science majors for four-year colleges. Individuals may also choose whether to work full-time, part-time, or not at all. A key feature of our approach is to account for correlated learning through college grades and wages, thus implying that individuals may leave or re-enter college as a result of the arrival of new information on their ability and productivity. We use our results to quantify the importance of informational frictions in explaining the observed school-to-work transitions and to examine sorting patterns.

Suggested Citation

  • Tyler Ransom & Esteban Aucejo & Arnaud Maurel & Peter Arcidiacono, 2014. "College Attrition and the Dynamics of Information Revelation," 2014 Meeting Papers 529, Society for Economic Dynamics.
  • Handle: RePEc:red:sed014:529
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    References listed on IDEAS

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    3. Hansen, Karsten T. & Heckman, James J. & Mullen, K.J.Kathleen J., 2004. "The effect of schooling and ability on achievement test scores," Journal of Econometrics, Elsevier, vol. 121(1-2), pages 39-98.
    4. Peter Arcidiacono & John Bailey Jones, 2003. "Finite Mixture Distributions, Sequential Likelihood and the EM Algorithm," Econometrica, Econometric Society, vol. 71(3), pages 933-946, May.
    5. John Bound & Michael F. Lovenheim & Sarah Turner, 2010. "Why Have College Completion Rates Declined? An Analysis of Changing Student Preparation and Collegiate Resources," American Economic Journal: Applied Economics, American Economic Association, vol. 2(3), pages 129-157, July.
    6. Joseph G. Altonji & Erica Blom & Costas Meghir, 2012. "Heterogeneity in Human Capital Investments: High School Curriculum, College Major, and Careers," Annual Review of Economics, Annual Reviews, vol. 4(1), pages 185-223, July.
    7. Carl Sanders, 2012. "Skill Uncertainty, Skill Accumulation, and Occupational Choice," 2012 Meeting Papers 633, Society for Economic Dynamics.
    8. Jonathan James, 2011. "Ability matching and occupational choice," Working Paper 1125, Federal Reserve Bank of Cleveland.
    9. Ralph Stinebrickner & Todd Stinebrickner, 2014. "Academic Performance and College Dropout: Using Longitudinal Expectations Data to Estimate a Learning Model," Journal of Labor Economics, University of Chicago Press, vol. 32(3), pages 601-644.
    10. Bobba, Matteo & Frisancho, Veronica, 2016. "Perceived Ability and School Choices," TSE Working Papers 16-660, Toulouse School of Economics (TSE), revised Oct 2018.
    11. Magali Beffy & Denis Fougère & Arnaud Maurel, 2012. "Choosing the Field of Study in Postsecondary Education: Do Expected Earnings Matter?," The Review of Economics and Statistics, MIT Press, vol. 94(1), pages 334-347, February.
    12. Josh Kinsler & Ronni Pavan, 2015. "The Specificity of General Human Capital: Evidence from College Major Choice," Journal of Labor Economics, University of Chicago Press, vol. 33(4), pages 933-972.
    13. Wiswall, Matthew & Zafar, Basit, 2016. "Preference for the workplace, investment in human capital, and gender," Staff Reports 767, Federal Reserve Bank of New York, revised 01 Mar 2017.
    14. Pugatch, Todd, 2012. "Bumpy Rides: School to Work Transitions in South Africa," IZA Discussion Papers 6305, Institute for the Study of Labor (IZA).
    15. Adda & Dustmann, 2004. "Career Progression and Formal versus on the Job Training," Econometric Society 2004 North American Winter Meetings 492, Econometric Society.
    16. Arcidiacono, Peter, 2004. "Ability sorting and the returns to college major," Journal of Econometrics, Elsevier, vol. 121(1-2), pages 343-375.
    17. Kate Antonovics & Limor Golan, 2012. "Experimentation and Job Choice," Journal of Labor Economics, University of Chicago Press, vol. 30(2), pages 333-366.
    18. Peter Arcidiacono & Robert A. Miller, 2011. "Conditional Choice Probability Estimation of Dynamic Discrete Choice Models With Unobserved Heterogeneity," Econometrica, Econometric Society, vol. 79(6), pages 1823-1867, November.
    19. Ralph Stinebrickner & Todd R. Stinebrickner, 2014. "A Major in Science? Initial Beliefs and Final Outcomes for College Major and Dropout," Review of Economic Studies, Oxford University Press, vol. 81(1), pages 426-472.
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    Citations

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    Cited by:

    1. Ralph Stinebrickner & Todd Stinebrickner, 2014. "Academic Performance and College Dropout: Using Longitudinal Expectations Data to Estimate a Learning Model," Journal of Labor Economics, University of Chicago Press, vol. 32(3), pages 601-644.
    2. Luc Bridet & Margaret Leighton, 2015. "The Major Decision: Labor Market Implications of the Timing of Specialization in College," Discussion Paper Series, Department of Economics 201510, Department of Economics, University of St. Andrews.
    3. repec:eee:ecolet:v:164:y:2018:i:c:p:82-85 is not listed on IDEAS
    4. Josh Kinsler & Ronni Pavan, 2016. "Parental Beliefs and Investment in Children: The Distortionary Impact of Schools," Working Papers 2016-029, Human Capital and Economic Opportunity Working Group.
    5. repec:wly:iecrev:v:59:y:2018:i:3:p:1077-1102 is not listed on IDEAS
    6. Backes-Gellner, Uschi & Herz, Holger & Kosfeld, Michael & Oswald, Yvonne, 2018. "Do Preferences and Biases predict Life Outcomes? Evidence from Education and Labor Market Entry Decisions," CEPR Discussion Papers 12609, C.E.P.R. Discussion Papers.
    7. Johannes Berens & Simon Oster & Kerstin Schneider & Julian Burghoff, 2018. "Early Detection of Students at Risk - Predicting Student Dropouts Using Administrative Student Data and Machine Learning Methods Abstract: High rates of student attrition in tertiary education are a m," Schumpeter Discussion Papers sdp18006, Universitätsbibliothek Wuppertal, University Library.
    8. Kartik B. Athreya & Janice Eberly, 2013. "The supply of college-educated workers: the roles of college premia, college costs, and risk," Working Paper 13-02, Federal Reserve Bank of Richmond.
    9. Lutz Hendricks & Oksana Leukhina, 2017. "How Risky is College Investment?," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 26, pages 140-163, October.
    10. Ana Figueiredo, 2017. "Uncertainty in education: The role of communities and social learning," 2017 Meeting Papers 529, Society for Economic Dynamics.
    11. repec:ucp:jlabec:doi:10.1086/696268 is not listed on IDEAS
    12. Liu, Shimeng & Sun, Weizeng & Winters, John V., 2017. "Up in STEM, Down in Business: Changing College Major Decisions with the Great Recession," GLO Discussion Paper Series 117, Global Labor Organization (GLO).
    13. Jared Ashworth & V. Joseph Hotz & Arnaud Maurel & Tyler Ransom, 2017. "Changes across Cohorts in Wage Returns to Schooling and Early Work Experiences," NBER Working Papers 24160, National Bureau of Economic Research, Inc.
    14. Lutz Hendricks & Oksana Leukhina, 2017. "How Risky is College Investment?," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 26, pages 140-163, October.
    15. Joseph G. Altonji & Peter Arcidiacono & Arnaud Maurel, 2015. "The Analysis of Field Choice in College and Graduate School: Determinants and Wage Effects," NBER Working Papers 21655, National Bureau of Economic Research, Inc.
    16. Bond, Timothy N. & Bulman, George & Li, Xiaoxiao & Smith, Jonathan, 2016. "Updated Expectations and College Application Portfolios," MPRA Paper 69317, University Library of Munich, Germany.
    17. Timothy N. Bond & George Bulman & Xiaoxiao Li & Jonathan Smith, 2018. "Updating Human Capital Decisions: Evidence from SAT Score Shocks and College Applications," Journal of Labor Economics, University of Chicago Press, vol. 36(3), pages 807-839.
    18. Lutz Hendricks & Oksana Leukhina, 2018. "The Return To College: Selection And Dropout Risk," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 59(3), pages 1077-1102, August.
    19. Schneider, Kerstin & Berens, Johannes & Oster, Simon & Burghoff, Julian, 2018. "Early Detection of Students at Risk - Predicting Student Dropouts Using Administrative Student Data and Machine Learning Methods," Annual Conference 2018 (Freiburg, Breisgau): Digital Economy 181544, Verein für Socialpolitik / German Economic Association.

    More about this item

    JEL classification:

    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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