College Attrition and the Dynamics of Information Revelation
Date
2016-05-31
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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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Scholars@Duke
Peter S. Arcidiacono
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 project, “CCP Estimation of Dynamic Discrete Choice Models with Unobserved Heterogeneity.” He has also been awarded grants from NICHD for his work entitled, “A Dynamic Model of Teen Sex, Abortion, and Childbearing;” and from the Smith Richardson Foundation for his study, “Does the River Spill Over? Race and Peer Effects in the College & Beyond” with Jacob Vigdor. Other recent studies of his include, “The Distributional Effects of Minimum Wage Increases when Both Labor Supply and Labor Demand are Endogenous” with Tom Ahm and Walter Wessles; “Explaining Cross-racial Differences in Teenage Labor Force Participation: Results from a General Equilibrium Search Model” with Alvin Murphy and Omari Swinton; and “The Effects of Gender Interactions in the Lab and in the Field” in collaboration with Kate Antonovics and Randy Walsh.
Arnaud Maurel
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