The Evidence on Credit Constraints in Post-Secondary Schooling

Pedro Carneiro, James J. Heckman

NBER Working Paper No. 9055
Issued in July 2002
NBER Program(s):Program on Children, Labor Studies Program, Public Economics Program, Economics of Education Program

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.

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Document Object Identifier (DOI): 10.3386/w9055

Published: Carneiro, P. and J. J. Heckman. "The Evidence On Credit Constraints In Post-Secondary Schooling," Economic Journal, 2002, v112(482,Oct), 705-734. citation courtesy of

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