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oai:recercat.cat:10230/8992025-12-18T01:49:40Zcom_2072_6col_2072_452953

Educational opportunity and the college premium Hendel, Igal Shapiro, Joel Willen, Paul college loans education signalling college wage premium Microeconomics Since World War II, the United States government has made improved access to higher education a priority. This e¤ort has substantially increased the number of people who complete college. We show that by reducing the effective interest rate on borrowing for education, such policies can actually increase the gap in wages between those with a college education and those without. The mechanism that drives our results is the signaling role of education first explored by Spence (1973). We argue that financial constraints on education reduce the value of education as a signal. We solve for the reduced form relationship between the interest rate and the wage premium in the steady state of a dynamic asymmetric information model. In addition, we discuss evidence of decreases in borrowing costs for education financing in the U.S. 2020-05-25T09:27:09Z 2020-05-25T09:27:09Z 2001-05-01 2020-05-25T09:19:05Z info:eu-repo/semantics/workingPaper Economics and Business Working Papers Series; 560 L'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commons http://creativecommons.org/licenses/by-nc-nd/3.0/es/ info:eu-repo/semantics/openAccess