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Title: College Risk and Return
Resulting in 1 citation.
1. Castex, Gonzalo
College Risk and Return
Review of Economic Dynamics 26 (October 2017): 91-112.
Cohort(s): NLSY79
Publisher: Society for Economic Dynamics
Keyword(s): Armed Forces Qualifications Test (AFQT); Cognitive Ability; College Dropouts; College Education; Educational Returns; Family Income

Permission to reprint the abstract has not been received from the publisher.

A large number of studies report high returns to college education. However, a large fraction of high school graduates do not pursue higher education. To reconcile these facts, I develop a heterogeneous-agent life-cycle model with endogenous college enrollment and uninsurable risk of college completion. The risk of failing to complete college explains 14% (18%) of returns to a 4-year (2-year) college. Risk premium varies with individual ability and family income. Using the model, I analyze how costs and benefits of college education affect enrollments and dropouts. Model predictions are consistent with trends in enrollment and dropout observed in the data and findings in related literature.
Bibliography Citation
Castex, Gonzalo. "College Risk and Return." Review of Economic Dynamics 26 (October 2017): 91-112.