NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Effects of Earnings Disclosure on College Enrollment Decisions

Justine Hastings, Christopher A. Neilson, Seth D. Zimmerman

NBER Working Paper No. 21300
Issued in June 2015, Revised in February 2018
NBER Program(s):Development Economics, Economics of Education, Labor Studies, Public Economics

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.

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Document Object Identifier (DOI): 10.3386/w21300

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