We assume that students can acquire a wage premium, thanks to studies, and form a rational expectation of their future … earnings, which depends on personal "ability". Students receive a private, noisy signal of their ability, and universities can … of test scores. Students optimally self-select as a result of pricing only. If capital markets are perfect but …

enrollment among students with low parental income and improve life-cycle earnings outcomes. This paper calculates the elasticity … there is a sharp increase in aggregate educational attainment as a result of the subsidy. However, I also find that there is … an overall decrease in mean life-cycle earnings due to students downgrading from 4-year colleges to 2-year colleges …

We assume that students can acquire a wage premium, thanks to studies, and form a rational expectation of their future … earnings, which depends on personal ability. Students receive a private, noisy signal of their ability, and universities can … of test scores. Students optimally self-select as a result of pricing only. If capital markets are perfect but …