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Post-Secondary Attendance by Parental Income: Comparing the U.S. and Canada

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This paper makes three contributions to the literature on educational attainment gaps by family income. First, we conduct a parallel empirical analysis of the effects of parental income on post- secondary (PS) attendance for recent high school cohorts in both the U.S. and Canada using data from the 1997 Cohort of the National Longitudinal Survey of Youth and Youth in Transition Survey. We estimate substantially smaller PS attendance gaps by parental income in Canada relative to the U.S., even after controlling for family background and adolescent cognitive achievement. Second, we develop an intergenerational schooling choice model that sheds light on the role of four potentially important determinants of the family income -- PS attendance gap: (i) borrowing constraints, (ii) a 'consumption value' of attending PS school, (iii) the earnings structure, and (iv) tuition policies and the structure of financial aid. Third, we document Canada -- U.S. differences in financial returns to PS schooling, tuition policy, and financial aid, discussing the extent to which these differences contribute to the stronger family income -- attendance relationship in the U.S. Most notably, we document the dependence of both non-repayable financial aid and government student loan access on parental income in both countries.

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  • Philippe Belley & Marc Frenette & Lance Lochner, 2010. "Post-Secondary Attendance by Parental Income: Comparing the U.S. and Canada," University of Western Ontario, Centre for Human Capital and Productivity (CHCP) Working Papers 20103, University of Western Ontario, Centre for Human Capital and Productivity (CHCP).
  • Handle: RePEc:uwo:hcuwoc:20103
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    1. 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.
    2. Pedro Carneiro & James J. Heckman, 2002. "The Evidence on Credit Constraints in Post--secondary Schooling," Economic Journal, Royal Economic Society, vol. 112(482), pages 705-734, October.
    3. Corak, Miles & Lipps, Garth & Zhao, John, 2003. "Family Income and Participation in Post-secondary Education," Analytical Studies Branch Research Paper Series 2003210e, Statistics Canada, Analytical Studies Branch.
    4. Philippe Belley & Lance Lochner, 2007. "The Changing Role of Family Income and Ability in Determining Educational Achievement," Journal of Human Capital, University of Chicago Press, vol. 1(1), pages 37-89.
    5. Frenette, Marc, 2003. "Access to College and University: Does Distance Matter?," Analytical Studies Branch Research Paper Series 2003201e, Statistics Canada, Analytical Studies Branch.
    6. Murnane, Richard J & Willett, John B & Levy, Frank, 1995. "The Growing Importance of Cognitive Skills in Wage Determination," The Review of Economics and Statistics, MIT Press, vol. 77(2), pages 251-266, May.
    7. Meta Brown & John Karl Scholz & Ananth Seshadri, 2012. "A New Test of Borrowing Constraints for Education," Review of Economic Studies, Oxford University Press, vol. 79(2), pages 511-538.
    8. Daniel Feenberg & Elisabeth Coutts, 1993. "An introduction to the TAXSIM model," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 12(1), pages 189-194.
    9. J. B. Burbidge & L. Magee & A. Leslie Robb, 2002. "The Education Premium in Canada and the United States," Canadian Public Policy, University of Toronto Press, vol. 28(2), pages 203-217, June.
    10. Frenette, Marc, 2007. "Why Are Youth from Lower-income Families Less Likely to Attend University? Evidence from Academic Abilities, Parental Influences, and Financial Constraints," Analytical Studies Branch Research Paper Series 2007295e, Statistics Canada, Analytical Studies Branch.
    11. John Cawley & James Heckman & Edward Vytlacil, 1998. "Understanding the Role of Cognitive Ability in Accounting for the Recent Rise in the Economic Return to Education," NBER Working Papers 6388, National Bureau of Economic Research, Inc.
    12. Keane, Michael P & Wolpin, Kenneth I, 2001. "The Effect of Parental Transfers and Borrowing Constraints on Educational Attainment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 42(4), pages 1051-1103, November.
    13. Frenette, Marc, 2005. "Is Post-secondary Access More Equitable in Canada or the United States?," Analytical Studies Branch Research Paper Series 2005244e, Statistics Canada, Analytical Studies Branch.
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    Cited by:

    1. Philippe Belley & Marc Frenette & Lance Lochner, 2011. "Post-Secondary Attendance by Parental Income in the U.S. and Canada: What Role for Financial Aid Policy?," University of Western Ontario, Economic Policy Research Institute Working Papers 20113, University of Western Ontario, Economic Policy Research Institute.
    2. Liu, Xingfei, 2014. "Educational Attainment of Second-Generation Immigrants: A U.S.-Canada Comparison," IZA Discussion Papers 8685, Institute for the Study of Labor (IZA).

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