University choice: the role of expected earnings, nonpecuniary outcomes, and financial constraints

Adeline Delavande, Basit Zafar

Research output: Contribution to journalArticle

4 Citations (Scopus)

Abstract

We investigate the determinants of students’ university choice in Pakistan, with a focus on monetary returns, nonpecuniary factors enjoyed at school, and financial constraints. To mitigate the identification problem concerning the separation of preferences, expectations, and market constraints, we use rich data on subjective expectations, with direct measures of financial constraints, to estimate a life-cycle model of school choice jointly with school-specific expectations of dropping out. We find that labor market prospects play a small role. Instead, nonpecuniary outcomes, such as the school’s ideology, are the major determinants. Policy simulations suggest that relaxing financial constraints would have large welfare gains.

Original languageEnglish
Pages (from-to)2343-2393
JournalJournal of Political Economy
Volume127
Issue number5
DOIs
Publication statusPublished - 1 Oct 2019

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