Journal Article

University choice: the role of expected earnings, non-pecuniary outcomes, and financial constraints

Authors

Publication date

Oct 2019

Summary

We investigate the determinants of students’ university choice in Pakistan, with a focus on monetary returns, non-pecuniary factors enjoyed at school, and financial constraints. To mitigate the identification problem concerning the separation of preferences, expectations and market constraints, we use rich data on subjective expectations, with direct measures of financial constraints, to estimate a life-cycle model of school choice jointly with school-specific expectations of dropping out. We find that labor market prospects play a small role. Instead, non-pecuniary outcomes, such as the school’s ideology, are the major determinants. Policy simulations suggest that relaxing financial constraints would have large welfare gains.

Published in

Journal of Political Economy

Volume and page numbers

127 , 2343 -2393

DOI

https://doi.org/10.1086/701808

ISSN

16

Subjects

Wages And Earnings, Finance, and Higher Education

Links

University of Essex Research Repository - Accepted Version - http://repository.essex.ac.uk/23645/

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1. University choice: the role of expected earnings, non-pecuniary outcomes and financial constraints

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