Constraints in the Demand for Education: What Can we Learn from Subjective Assessments?

Olga V. Sorokina 1 , 1
  • 1 PricewaterhouseCoopers

Abstract

While the large disparities in educational attainment by socioeconomic status in the United States point towards the importance of credit constraints, there is no consensus in the economic literature regarding their pervasiveness. To evaluate how subjective information can enhance our understanding of the role of credit constraints in education, I focus on NLSY79 respondents' assessments of financial obstacles to schooling. About 12 percent of young adults in the data expect to underinvest in education because of financial reasons or the need to work. Using this information in a regression model of educational attainment shows that it provides valuable behavioral insights, above and beyond standard measures of income and family background.

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The B.E. Journal of Economic Analysis & Policy (BEJEAP) is an international forum for scholarship that employs microeconomics to analyze issues in business, consumer behavior and public policy. Topics include the interaction of firms, the functioning of markets, the effects of domestic and international policy and the design of organizations and institutions.

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