The Effects of Credit Constraints in College on Human Capital and Labor Supply
Early Career Research Award
A key insight of labor economics is that credit constraints may reduce human capital investment. Much of the financial aid policy for college in the United States has attempted to address this concern by providing loans and grants to accommodate low-income students. However, surprisingly little work has tried to directly measure how many students are credit constrained. I propose to use a discontinuous change in student eligibility for grants and loans to estimate how many students are credit constrained. I further will show the effects of additional financial aid (and the easing of credit constraints) on credits attempted, graduation, and labor supply.