Working Paper: CEPR ID: DP16103
Authors: Ghazala Azmat; Katja Kaufmann
Abstract: We exploit a large exogenous shock to study the determinants of college attendance and the role played by one's environment. We analyze whether, and how quickly, adolescents' college plans are adapted, explore factors leading to the adjustment, and examine how these factors ultimately impact later educational attainment. Using differences across East German cohorts induced by the timing of the German Reunification (a change for the East from state socialism to capitalist democracy), we show that shortly after relative to before that time, college plans among high-school students increased substantially, which was followed by sizable increases in the completion of the college entrance certificate five years later. Our analysis sheds light on the elasticity of beliefs and preferences of different cohorts of youths in the case of a large shock. Perceived educational returns, economic preferences ("consumerism") and sociopolitical attitudes ("individualism") adapt quickly in response to the shock and are directly linked to changes in plans and outcomes. Cohorts closer to critical educational junctions at the time of Reunification, however, adjusted their plans to a much lesser extent. While they similarly updated the expected returns to education, they exhibited a slower adjustment in their preferences relative to younger cohorts.
Keywords: college plans; perceived returns; economic; social and political preferences
JEL Codes: Z1; I21; D72; D91
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| German reunification (F55) | educational plans of adolescents in East Germany (I21) |
| educational plans of adolescents in East Germany (I21) | completion rates of the Abitur five years later (Y40) |
| German reunification (F55) | perceived returns to education (I26) |
| perceived returns to education (I26) | educational plans of adolescents in East Germany (I21) |
| German reunification (F55) | economic preferences shift towards consumerism and individualism (F61) |
| German reunification (F55) | decline in collectivist attitudes (D70) |