Working Paper: NBER ID: w9055
Authors: Pedro Carneiro; James J. Heckman
Abstract: This paper examines the family income -- college enrollment relationship and the evidence on credit constraints in post-secondary schooling. We distinguish short-run liquidity constraints from the long-term factors that promote cognitive and noncognitive ability. Long-run factors crystallized in ability are the major determinants of the family income -- schooling relationship, although there is some evidence that up to 8% of the U.S. population is credit constrained in a short-run sense. Evidence that IV estimates of the returns to schooling exceed OLS estimates is sometimes claimed to support the existence of substantial credit constraints. This argument is critically examined.
Keywords: No keywords provided
JEL Codes: I28; D33; H43
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| long-term family factors (J12) | college enrollment (I23) |
| family income (D31) | college enrollment (I23) |
| short-term credit constraints (E51) | college enrollment (I23) |
| long-term factors (J29) | family income (D31) |
| credit constraints (E51) | college enrollment (I23) |
| IV estimates (C26) | OLS estimates (L00) |