Higher Education Sorting and Social Mobility

• Department of Economics

In this seminar, Monica Costa Dias (University of Bristol) will present the paper: "Higher Education Sorting and Social Mobility".

Education is a main facilitator of social, inter-generational mobility, and higher education plays a major role in this. But while returns to higher education are large, they also vary widely with the characteristics of programmes, those of students and how the two align.

This paper investigates the role of sorting between students and higher education programmes in explaining heterogeneity in the returns to higher education and the extent to which students from different socio-economic backgrounds and with different skill sets benefit differently from higher education. We develop a life-cycle model of education, labour supply and earnings that allows for a rich characterisation of heterogeneity in the skills that students have and that different educational programmes provide. A critical feature of our model is that students and programmes meet in a matching market in equilibrium, where the sorting of students to programmes is determined.

We use our model to describe the sorting to students and HE programmes in England and the returns to these investments. We exploit higher education funding reforms and rich administrative data to estimate the model and show that it reproduces empirical patterns accurately. We use the model to quantify the role of higher education for social mobility and to run counterfactual analysis of policies aiming at improving participation among students from poorer backgrounds. We conclude that policies targeting the demand side are often insufficient to move the needle on social mobility given capacity constraints; supply side policies could potentially be highly effective.

Co-authors: Jack Britton and David Goll