Katja Maria Kaufmann

Understanding the income gradient in college attendance in Mexico: The role of heterogeneity in expected returns

Differences in college enrollment between poor and rich are striking in Latin America. Explanations such as differences in college preparedness and credit constraints have been advanced. An alternative explanation could be differences in information sets between poor and rich, for example, about career opportunities, translating into different expected returns to college. Poor people might expect low returns and thus decide not to attend or they might face high (unobserved) costs that prevent them from attending despite high expected returns. I use data on peoples subjective expectations of returns to address this identification problem. I find that poor individuals require higher expected returns to be induced to attend college than individuals from rich families. Testing predictions of a model of college attendance shows that poor individuals are particularly responsive to changes in direct costs, which is consistent with them being credit constrained. Performing counterfactual policy experiments, I find that a sizeable fraction of poor individuals would change their decision in response to a reduction in direct costs and that these individuals at the margin have expected returns that are as high or higher than the individuals already attending college.

Returns to Elite Higher Education in the Marriage Market: Evidence from Chile

In this paper we estimate the marriage market returns to being admitted to a higher ranked (i.e. more ”elite”) university by exploiting unique features of the Chilean university admission system.This system centrally allocates applicants based on their university entrance test score, which allows us to identify causal effects by using a regression discontinuity approach. Moreover, the Chilean context provides us with the necessary data on the long run outcome ‘partner quality’. We find that being admitted to a higher ranked university has substantial returns in terms of partner quality for women, while estimates for men are about half the size and not significantly different from zero. JEL-Classification: I23, I24, J12. Keywords: Returns to education quality, higher education, marriage market, regression discontinuity, Chile.