Working Paper
Expanding College Access
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 aggregate earnings by 0.8 percent and welfare by 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. These findings remain robust when we account for peer effects in learning and general equilibrium changes in the college wage premium.
JEL Classification: J24;
https://doi.org/10.20955/wp.2026.005
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https://doi.org/10.20955/wp.2026.005
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Bibliographic Information
Provider: Federal Reserve Bank of St. Louis
Part of Series: Working Papers
Publication Date: 2026-03-26
Number: 2026-005