Expanding Access to Selective Colleges

Hendricks, Lutz; Koreshkova, Tatyana; Leukhina, Oksana

doi:10.20955/wp.2026.005

Working Paper Revision

Expanding Access to Selective Colleges

Abstract: This paper studies the effects of expanding high-quality public university capacities on student earnings and welfare. Using a quantitative model of college choice, we find that expanding the most selective colleges by 20 percent increases skilled labor supply by 5.3 percent, aggregate earnings by 0.8 percent, and welfare by 2.2 percent. The gains arise because a large number of high ability students are rationed out of selective colleges. When admitted, these students graduate at high rates and enjoy substantial earnings gains. The earnings gains generated by expanding college capacity are eight times larger than the fiscal cost of financing it. Unskilled workers also gain from the expansion as the increased supply of skilled labor causes their wages to rise. These findings remain robust when we account for peer effects in student learning.

JEL Classification: I23; J24;

https://doi.org/10.20955/wp.2026.005