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Title: Student Debt and Labor Market Trajectories

Citation Type: Miscellaneous

Publication Year: 2022

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Abstract: How do financial frictions affect human capital investments and labor market trajectories? To study this question, I build a novel dataset covering more than 700,000 U.S. students, merging commencement records and professional resumes. I use the staggered implementation of universal no-loan policies across 22 universities from 2001 to 2019 as a source of quasi-random variation in student debt. I find that financial frictions affect human capital investments across two dimensions. First, student debt affects an intertemporal trade-off between current and future income: Students with higher student debt choose career paths associated with higher initial earnings and lower earnings “slopes.” Second, student debt differentially affects students depending on their family backgrounds: Students who grew up in low-income families display greater sensitivity to changes in student debt. Combined, these findings highlight the role of financial frictions and dynamic life-cycle trade-offs in labor markets.

Url: https://fraconference.com/wp-content/uploads/ninja-forms/2/hampole_2022-09-05_hoeiu.pdf

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Authors: Hampole, Menaka V.

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Data Collections: IPUMS USA, IPUMS NHGIS

Topics: Education, Labor Force and Occupational Structure, Poverty and Welfare

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