Essays on Economics of Education

Xiaoxiao Li, Purdue University

Abstract

This dissertation is composed of two independent chapters in the field of economics of education. The first chapter studies the impact of financial incentives on the admission policy of different types of students in 4-year public colleges in the U.S. The second chapter studies the updating behavior of college application in response to information shocks. The first chapter investigates potential explanations for the recent expansion in enrollments of undergraduate international students, with a particular focus on an analysis of the supply-side of educational services. As college education has become one of the leading export industries in the U.S., issues related to international students have attracted increasing attention. The theoretical and empirical work in this chapter identifies an important determinant of differences across colleges in the enrollment of different types of students, namely the level of states' financial support of 4-year public institutions. Specifically, public colleges increase the proportion of out-of-state students in general, and international students in particular during the 2008 to 2012 period, as these students on average pay higher tuition rates, and thus can provide additional tuition revenue and offset the loss of state support. This adjustment is particularly large for selective institutions. Moreover, estimates using administrative student visa data with country of origin information suggest that the growth in international students is largely Chinese students. Further, evidence suggests that these changes in the composition of the student body at public colleges have been accompanied by changes in tuition rates and student body size. These changes have important implications with respect to human capital acquisition across student types with type defined by home location and ability. The second chapter examines whether students update the colleges to which they consider applying in response to large, unanticipated information shocks generated by the release of SAT scores -- a primary factor in admission decisions. Exploiting population data on the timing of college selection and a policy that induces students to choose colleges prior to taking the exam, this chapter provides evidence that students update their portfolios in terms of selectivity, tuition, and sector. However, the magnitude of updating is too modest to significantly reduce unexplained variation across students, suggesting that non-academic factors are the dominant determinants of college match.

Degree

Ph.D.

Advisors

Mumford, Purdue University.

Subject Area

Economics|Labor economics|Education

COinS