Job market paper: Effects of Higher Education Funding with Heterogeneous Worker Types and School Choice

Abstract: Government funding of higher education can have significant effects on economic output, growth, income distribution, and welfare by affecting the household’s post-secondary higher education decision. This work examines how alternative funding policies can alter households’ human capital acquisition and career paths which impacts aggregate labor productivity and new product innovation. The model employs a multi-period over-lapping generations framework. In the initial period, workers sort themselves through educational choice into three skill groups: low-skill (no college education), medium-skill (college degree in non-R\&D curricula), and high-skill (college degree in R\&D). The high-skill group performs research and development. Newly minted products must pass through an adoption process before becoming usable. The low- and medium-skill groups are imperfect substitutes in the production of intermediate goods. Final goods are produced by combining adopted technologies and intermediate goods. The steady-state growth model is calibrated to match current US higher education enrollment statistics by curricula, wage premium data, savings rate data by age, 2% annual economic growth, and data for total money income over the life-cycle. The results of comparative static exercises show the impact of alternative funding regimes. Funding high-skilled education improves growth at the expense of lower level effects on output; however, funding medium-skilled education, while having only modest effects of growth, substantially increases output and yields greater overall welfare benefits.

Dissertation: Educational Choice and Economic Activity

Committee: Milton Marquis, Manoj Atolia, Johnathon Kreamer, Alec Kercheval

In progress:

Dynamic responses of higher education funding with heterogeneous agents, school choice, and R&D (with Manoj Atolia)

Investment decisions in human capital with two uses of high-skilled labor: increasing product variety and labor-replacing capitol (with Morgan Holland)