Self-financing, parental transfer, and college education

• Main Authors: LEE, Jungho, MYONG, Sunha
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2023
• Subjects: College Education; Parental Transfer; Labor Supply; Intergenerational Mobility; Financial Constraints; Econometrics; Economics
• Online Access: https://ink.library.smu.edu.sg/soe_research/2393; https://ink.library.smu.edu.sg/context/soe_research/article/3392/viewcontent/student_labor.pdf
• Institution: Singapore Management University

We show that financial constraints can affect the human capital accumulation of college students by influencing students’ labor supply. We document that many college students work a substantial number of hours at low-skill jobs, and students who have fewer financial resources (in particular, parental transfer) tend to work more. We develop a model that incorporates college students’ labor supply and its interaction with parental transfer in the presence of financial constraints. By estimating the model, we quantify the trade-off between self-financing and human capital accumulation and discuss the implications of a wage subsidy policy.