College Attrition and the Dynamics of Information Revelation
Abstract
This paper investigates the role played by informational frictions in college and
the workplace. We estimate a dynamic structural model of schooling and work decisions,
where individuals have imperfect information about their schooling ability and labor
market productivity. We take into account the heterogeneity in schooling investments
by distinguishing between two- and four-year colleges, graduate school, as well as
science and non-science majors for four-year colleges. Individuals may also choose
whether to work full-time, part-time, or not at all. A key feature of our approach
is to account for correlated learning through college grades and wages, whereby individuals
may leave or re-enter college as a result of the arrival of new information on their
ability and productivity. Our findings indicate that the elimination of informational
frictions would increase the college graduation rate by 9 percentage points, and would
increase the college wage premium by 32.7 percentage points through increased sorting
on ability.
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https://hdl.handle.net/10161/13192Collections
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Peter S. Arcidiacono
Professor of Economics
Professor Arcidiacono specializes in research involving applied microeconomics, applied
economics, and labor economics. His research primarily focuses on education and discrimination.
His work focuses specifically on the exploration of a variety of subjects, such as
structural estimation, affirmative action, minimum wages, teen sex, discrimination,
higher education, and dynamic discrete choice models, among others. He recently received
funding from a National Science Foundation Grant for his pro
Arnaud Maurel
Associate Professor of Economics
Professor Maurel’s research focuses on labor economics, economics of education, and
microeconometrics. Most of his non-methodological work lies at the intersection between
the economics of education and labor economics, with a focus on post-secondary education
demand and occupational choices, along with the production of skills and their returns
on the labor market. On the methodological side, his research is primarily concerned
with the identification and estimation of selection and treat
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