Peter Q. Blair (Harvard University)

Event
Monday, January 31, 2022 - 3:40 pm to 5:00 pm
Event Type: 

Peter Q. BlairDescription: Department Seminar: Peter Q. Blair

Location: 368A Heady Hall

Title: "Why Don’t Elite Colleges Expand Supply"

Abstract: While college enrollment has more-than doubled since 1970, elite colleges have barely increased supply, instead reducing admit rates. We show that straightforward reasons cannot explain this behavior. We propose a model where colleges compete on prestige, measured as relative selectivity or admit rates. Higher demand decreases [increases] the admit rate if the weight on prestige is above [below] a critical value, consistent with experience in elite [non-elite] colleges. The calibrated model closely replicates the data while counter-factual simulations without prestige fail. This ``prestige externality'' is Pareto inefficient, with schools and students worse off, producing large welfare losses.

Contact Person: John Winters

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