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A General Equilibrium Analysis of College Enrollment, Completion, and Labor Market Outcomes

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  • Maria Ferreyra

    (The World Bank)

  • Angelica Sanchez Diaz

    (World Bank)

  • Carlos Garriga

    (Federal Reserve Bank of St. Louis)

Abstract

This paper evaluates the general equilibrium effects of alternative college funding regimes, including free college and non-defaultable student loans. Our analysis suggests that the number of years that takes to break-even in the returns to college is substantially lower than in developed economies. Endogenizing the returns to education shows that policies that increase college graduation rates reduce the skill premium. This reduction is magnifi ed by the increase in the compensation to high school graduates, but the quantitative effects are very small and take years to realize. Incentive based-policies are more effective that universal policies like free tuition.

Suggested Citation

  • Maria Ferreyra & Angelica Sanchez Diaz & Carlos Garriga, 2018. "A General Equilibrium Analysis of College Enrollment, Completion, and Labor Market Outcomes," 2018 Meeting Papers 1282, Society for Economic Dynamics.
    • Handle: RePEc:red:sed018:1282
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    References listed on IDEAS

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    Cited by:

    1. Thomas Ahn & Peter Arcidiacono & Amy Hopson & James R. Thomas, 2019. "Equilibrium Grade Inflation with Implications for Female Interest in STEM Majors," NBER Working Papers 26556, National Bureau of Economic Research, Inc.

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