Accounting for Changes in College Attendance Profile: a Quantitative Life-Cycle Analysis

Abstract

This paper analyzes changes in the distribution of college enrollment rates that occurred between 1980 and 2000. It aims not only to explain the 69% increase in the overall college enrollment, but also changes in the profile of college students in terms of their ability and financial status. College attendance increased by 27% less than average among individuals in the lowest quartile of the joint family income and ability distribution. However, it increased by 12% more than average for individuals in the highest quartile of the distribution. The increase in college enrollment was far from uniform and, to explain these changes, I construct a life-cycle heterogeneous agents model of labor supply and human capital formation. The model is calibrated to match schooling patterns and labor market outcomes for the 1979 and 1997 NLSY cohorts. I explicitly model and quantitatively estimate the effect of four potential driving forces to explain the observed changes: The increase in the college wage gap, the change in the allocation of grants and scholarships, the increase in educational costs, and the changes in the ability and family income distribution. Finally, I explore alternative educational policies and their effect on different population groups.