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The Effects of Earnings Disclosure on College Enrollment Decisions

Author

Listed:
  • Justine Hastings

    (Brown University)

  • Christopher A. Neilson

    (Princeton University)

  • Seth D. Zimmerman

    (University of Chicago)

Abstract

We use a large-scale survey and field experiment to evaluate a policy that provided information about college- and major-specific earnings and cost outcomes to college applicants in Chile. The intervention was administered by the Chilean government and reached 30% of student loan applicants. We show that the low-income and low-achieving students who apply to low-earning college degree programs overestimate earnings for past graduates by over 100%, while beliefs for high-achieving students are correctly centered. Treatment causes low-income students to reduce their demand for low-return degrees by 4.6%, and increases the likelihood they remain in college for at least four years. To understand the mechanisms driving the effect of disclosure policies we estimate a model of college demand. We find that disclosure changes college choice by reducing uncertainty about earnings outcomes, but that its impact is limited by strong student preferences for non-pecuniary degree attributes.

Suggested Citation

  • Justine Hastings & Christopher A. Neilson & Seth D. Zimmerman, 2015. "The Effects of Earnings Disclosure on College Enrollment Decisions," Working Papers 2015-1, Princeton University. Economics Department..
    • Handle: RePEc:pri:econom:2015-1
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    References listed on IDEAS

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    More about this item

    Keywords

    College; Enrollment; Earnings Disclosure; Chile;
    All these keywords.

    JEL classification:

    • H0 - Public Economics - - General
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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