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IZA
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The Evidence on Credit Constraints in Post-Secondary Schooling
by
Pedro Carneiro, James J. Heckman
(June 2002)
published in: Economic Journal, 2002, 112 (482), 705-734
Abstract:
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.
Text: See Discussion Paper No. 518 
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