This paper studies the determinants of college attendance in Mexico. I use subjective quantitative expectations of future earnings to analyze both the causes and the implications of the steep income gradient in higher-education enrollment. In particular, I examine whether data on individuals ’ expected returns to college as well as on their perceived earnings risk can improve our understanding of heterogeneity in college attendance choices. I find that while expected returns and perceived risk from human capital investment are important determinants, lower returns or higher risk are not sufficient, alone, to explain the poor’s low attendance rates. I also find that poor individuals require significantly higher expected returns to be induced to attend college, implying that they face significantly higher costs than individuals with wealthy parents. I then test predictions of a simple model of college attendance choice in the presence of credit constraints, using parental income and wealth as a proxy for the household’s (unobserved) interest rate. I find that poor individuals with high expected returns are particularly responsive to changes in direct costs such as tuition, which is consistent with credit constraints playing an important role. To evaluate potential welfare implications of introducing a means-tested student loan program, I apply the Local Instrumental Variables approach of Heckman and Vytlacil (2005) to my model of college attendance choice. I find that a sizeable

We show that data on subjective expectations, especially on outcomes from coun-terfactual choices and choice probabilities, are a powerful tool in recovering ex ante treatment effects as well as preferences for different treatments. In this paper we focus on the choice of occupation, and use elicited beliefs from a sample of male undergradu-ates at Duke University. By asking individuals about potential earnings associated with counterfactual choices of college majors and occupations, we can recover the distribu-tion of the ex ante monetary returns to particular occupations, and how these returns vary across majors. We then propose a model of occupational choice which allows us to link subjective data on earnings and choice probabilities with the non-pecuniary preferences for each occupation. We find large differences in expected earnings across occupations, and substantial heterogeneity across individuals in the corresponding ex ante returns. However, while sorting across occupations is partly driven by the ex ante monetary returns, non-monetary factors play a key role in this decision. Finally, our results point to the existence of sizable complementarities between college major and occupations, both in terms of earnings and non-monetary benefits.

ABSTRACT Does Exposure to Economics Bring New Majors to the Field? Evidence from a Natural Experiment * This study investigates how being exposed to a field of study influences students' major choices. We exploit a natural experiment at a Swiss university where all first-year students face largely the same curriculum before they choose a major. An important component of the first-year curriculum that varies between students involves a multi-term research paper in business, economics, or law. Due to oversubscription of business, the university assigns the field of the paper in a standardized way that is unrelated to student characteristics. We find that being assigned to write in economics raises the probability of majoring in economics by 2.7 percentage points, which amounts to 18 percent of the share of students who major in economics. JEL Classification: A20, I20, I23

In most educational settings, grading varies across courses due to differences in teacher grading standards and student abilities. Students seeking high grades may therefore have an incentive to take courses where high grades are easier to achieve, potentially corroding student learning, evaluation of student achievement, and the fairness and efficiency of postgraduation labor outcomes. A grading system that takes into account heterogeneity of teacher standards and student ability could mitigate these problems. Using unique data from a major Canadian research university, we calculate student grade point averages net of course difficulty and student cohort ability within each course, and find evidence that raw grade point averages in some majors systematically distort student achievement. We then link undergraduate performance and law school admissions and performance data. We find that our adjusted undergraduate grade point average better predicts performance on the Law School Admissions Test, while the raw grade point average better predicts admission to law school. These results suggest a refined grading system can better evaluate differences in performance across students, to the benefit of educational admissions and labor markets.

and digitizing data records. J-PAL Latin America and in particular Elizabeth Coble provided excellent field assistance. We thank Ivan Silva of DEMRE for help locating and accessing data records. We thank the excellent leadership and staff at the Chilean Ministry of Education for their invaluable support

assistance. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit organization supported by Deutsche Post Foundation. The center is associated with the University of Bonn and offers a stimulating research environment through its international network, workshops and conferences, data service, project support, research visits and doctoral program. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. Terms of use: Documents in EconStor may D I S C U S S I O N P A P E R S E R I E S IZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. We study the impact of a student's ordinal rank in a high school cohort on educational attainment several years later. To identify a causal effect, we compare multiple cohorts within the same school, exploiting idiosyncratic variation in cohort composition. We find that a student's ordinal rank significantly affects educational outcomes later in life. If two students with the same ability have a different rank in their respective cohort, the higher-ranked student is significantly more likely to finish high school, attend college, and complete a 4-year college degree. These results suggest that low-ranked students under-invest in their human capital even if they have a high ability compared to most students of the same age. Exploring potential channels, we find that students with a higher rank have higher expectations about their future career, a higher perceived intelligence, and receive more support from their teachers. NON-TECHNICAL SUMMARY Parents often believe that high-ability classmates have a positive influence on their children, and potential classmates are often a decisive factor for choosing a school. In this paper, we show that having high-ability peers in school is not beneficial for everyone. A student who is surrounded by peers that are smarter than herself has a low ordinal rank within her peer group, which may come with some disadvantages. While she may benefit from studying with smarter peers, she may experience a disadvantage, for example, because teachers give more attention to higher-ranked students, or because higher-ranked students have a higher self-confidence and higher expectations about their future career. In this paper, we test whether a student's ordinal rank in a high-school cohort -being the best, second-best, third-best, and so on -affects success in high school, as well as decisions to go to college. We use data from Add Health, a large-scale survey in a representative sample of US high schools, which was administered to 90,000 students in the mid-1990s. In four subsequent waves, these students have been followed until 2008, allowing us to track students from age 16 to age 30, and to link the characteristics of a high-school cohort with educational outcomes many years later. To disentangle the effect of ordinal rank from other factors that could influence educational success -for example, school choice, absolute cognitive ability, parental background, or ethnicity -we compare students who go to the same school and who have the same absolute ability, gender, parental background, etc., but who are in different cohorts. Because not every cohort is the same -some cohorts are smarter than others -a student with the same absolute level of cognitive ability has a different ordinal rank in different cohorts. Overall, we find that a student's ordinal rank plays an important role for college choices and success in college. We find that in a cohort of 100 students a student who ranks 10 places higher than another is one percentage point more likely to go to college after high-school, and, equally, one percentage point more likely to complete a 4-year college degree. These results suggest that smart students who have a low rank because their peers are even smarter under-invest in their human capital; they choose not to go to college because of their low rank within their cohort. We also give suggestive evidence why rank matters. We find, for example, that students of higher rank have a higher perceived intelligence, and they have higher expectations about their future career. Moreover, students of a higher rank receive more support from their teachers.

Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may be saved and copied for your personal and scholarly purposes. You are not to copy documents for public or commercial purposes, to exhibit the documents publicly, to make them publicly available on the internet, or to distribute or otherwise use the documents in public. If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. www.econstor.eu

Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in Abstract In this paper, we use a hypothetical choice methodology to robustly estimate preferences for workplace attributes. Undergraduate students are presented with sets of jobs that vary in their attributes (such as earnings and job hours flexibility) and asked to state their probabilistic choices. We show that this method robustly identifies preferences for various job attributes, free from omitted variable bias and free from considering the equilibrium matching of workers to jobs. While there is substantial heterogeneity in preferences, we find that women, on average, have a higher willingness to pay for jobs with greater work flexibility (lower hours, and part-time option availability) and job stability (lower risk of job loss), while men have a higher willingness to pay for jobs with higher earnings growth. In the second part of the paper, using data on students' perceptions about the types of jobs that would be offered to them conditional on their college major choices, we relate these job attribute preferences to major choice. We find that students perceive jobs offered to humanities majors to have fewer hours, more worktime flexibility, and higher stability than jobs offered to economics/business majors. These job attributes are found to play a role in major choice, with women exhibiting greater sensitivity to nonpecuniary job attributes in major choice.

Abstract SBTC is a powerful mechanism in explaining the increasing gap between educated and uneducated wages. However, SBTC cannot mimic the US within-group wage inequality. This paper provides an explanation for the observed intra-college group inequality by showing that the top decile earners' significant wage growth is underpinned by the link between ex ante ability, math-heavy college majors and highly quantitative occupations. We develop a general equilibrium model with multiple education outcomes, where wages are driven by individuals' ex ante abilities and acquired math skills. A large portion of within-group and general wage inequality is explained by math-biased technical change (MBTC). JEL classification: E20, E24, E25, I20, I24, J24, J31