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Equilibrium Tuition, Applications, Admissions and Enrollment in the College Market

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  • Chao Fu

    (Department of Economics, University of Wisconsin, Madison)

Abstract

I develop and estimate a structural equilibrium model of the college market. Students, having heterogeneous abilities and preferences, make college application decisions, subject to uncertainty and application costs. Colleges, observing only noisy measures of student ability, choose tuition and admissions policies to compete for more able students. Tuition, applications, admissions and enrollment are joint outcomes from a subgame perfect Nash equilibrium. I estimate the structural parameters of the model using data from the National Longitudinal Survey of Youth 1997, via a three-step procedure to deal with potential multiple equilibria. In counterfactual experiments, I use the model .rst to examine the extent to which college enrollment can be increased by expanding the supply of colleges, and then to assess the importance of various measures of student ability.

Suggested Citation

  • Chao Fu, 2012. "Equilibrium Tuition, Applications, Admissions and Enrollment in the College Market," PIER Working Paper Archive 12-013, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    • Handle: RePEc:pen:papers:12-013
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    References listed on IDEAS

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    Cited by:

    1. Brant Abbott & Giovanni Gallipoli & Costas Meghir & Giovanni L. Violante, 2019. "Education Policy and Intergenerational Transfers in Equilibrium," Journal of Political Economy, University of Chicago Press, vol. 127(6), pages 2569-2624.
    2. Gianluca Violante & Giovanni Gallipoli & Costas Meghir, 2005. "Education Decisions, Equilibrium Policies and Wages Dispersion," 2005 Meeting Papers 522, Society for Economic Dynamics.
    3. Brant Abbott & Giovanni Gallipoli & Costas Meghir & Giovanni L. Violante, 2013. "Education Policy�and Intergenerational Transfers in Equilibrium," Cowles Foundation Discussion Papers 1887R2, Cowles Foundation for Research in Economics, Yale University, revised May 2018.
    4. Dennis Epple & Richard Romano & Sinan Sarpça & Holger Sieg, 2013. "The U.S. Market for Higher Education: A General Equilibrium Analysis of State and Private Colleges and Public Funding Policies," NBER Working Papers 19298, National Bureau of Economic Research, Inc.

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    More about this item

    Keywords

    College market; tuition; applications; admissions; enrollment; discrete choice; market equilibrium; multiple equilibria; estimation;
    All these keywords.

    JEL classification:

    • J00 - Labor and Demographic Economics - - General - - - General
    • I20 - Health, Education, and Welfare - - Education - - - General

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