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Education Life-cycle: School Entry, Investment, and College

Paper Session

Sunday, Jan. 7, 2018 8:00 AM - 10:00 AM

Pennsylvania Convention Center, 104-B
Hosted By: American Economic Association
  • Chair: Kathryn Birkeland, University of South Dakota

The Effect of Age at School Entry on Educational Attainment and Labor Market Outcomes: Evidence from China

Chen Meng
,
University of Illinois-Chicago
Chuanyi Guo
,
University of Illinois-Chicago
Xuening Wang
,
University of Illinois-Chicago

Abstract

The long-term economic impact of children’s age at primary school entry is one of the primary concerns to policy-makers, educators, and families. Using China Family Panel Studies (CFPS), this paper is the first to explore these effects in the Chinese context with a regression discontinuity design, employing the threshold date for primary school entrance set by the 1986 Compulsory Education Law of China as a source of exogenous variation in the timing of school entry. First, this paper documents weak compliance with the school entry legislation. Individuals born just after the threshold date, are only 0.29 years older at school entry than their earlier born counterparts, whereas the predicted difference with perfect compliance is nearly one year. We find a significant effect on years of schooling using the full sample, with individuals born right after the threshold attaining 0.55 more completed years of schooling on average. Positive effect of delayed school enrollment on educational attainment is also significant for subsample with agricultural Hukou status. However, there is no evidence that school entry age affects labor market outcomes, such as personal income and probability of employment, in adulthood.

Parental Education Investment Decision with Imperfect Signal of Talent

Tianqi Gan
,
University of Maryland

Abstract

This paper builds up a theoretical parental education investment model which employs discontinuous utility function and introduces uncertainty into parental education investment decision. With some basic and reasonable assumptions, this paper proves that the correlation between talent signal and optimal education investment level is not monotone. In most situations, the correlation will be positive. However, when parents' utility function is discontinuous at some thresholds, the bonus can motivate parents to add more investment on children so that they can reach the thresholds. In this case, the optimal education investment will decrease as talent increases.

This paper also introduces uncertainty into the decision process. With uncertainty, parents will maximize the expected utility. the optimal education investment curve will be smoothed out by the expectation process. The larger the standard deviation is, the smoother the curve becomes.

Moreover, the paper can also help us to understand the drop-out issue. The model predicts that the drop-out rate will be lower for students whose current years of schooling are close to graduation. The reason is that degrees have values which can motivate students to finish their degrees.

Access to Higher Education and Borrowing: Evidence From Merit-heavy States

Kathryn Birkeland
,
University of South Dakota

Abstract

One of the main levers for promoting access to college is need-based aid. However, some states have little state-level need-based aid instead relying primarily on merit-aid. To what extent can a public-university system provide the desired access to college using only merit-based aid? To what extent is student borrowing impacted by the absence of need-based aid in the state?

Using demographic data on households with school-age children, primary school performance, high school graduation rates, and college attendance rates, we find that without need-based aid, student access to college in the state is reduced. However, this reduction is somewhat offset by lower in-state tuition rates. We also find that the average level of student borrowing is higher in states without need-based aid, as one would expect. The impact is observed in both the percentage of students borrowing and the average debt for those who borrowed.

As previous works have shown, the impact of aid is felt most significantly for students from households in the second income quintile because of the current federal need-based aid programs for those in the first income quintile. Therefore, states with primarily merit-based aid may do well to include some income considerations for aid awards as a way to encourage students to stay in-state.
Discussant(s)
Christian Moser
,
Columbia University
Mandie Weinandt
,
University of South Dakota
Kristoph Kleiner
,
Indiana University
JEL Classifications
  • I2 - Education and Research Institutions