We study belief accuracy in a centralized higher-education admissions system using Norwegian data that combine a large pre-admission expectations survey with administrative records on offers, enrollment, and completion. Program-specific cutoffs provide a fuzzy regression discontinuity design that identifies objective counterfactual outcomes at the admission margin and allows direct comparison with subjective, state-contingent beliefs (first-choice access versus the relevant second-choice offer state). We find that enrollment forecast errors are driven mainly by mistaken beliefs about offer probabilities, while beliefs about enrollment conditional on an offer are comparatively accurate. For completion, the dominant error is persistence optimism: applicants substantially overestimate completion conditional on enrollment under both access states. Applicants also overstate first-minus-second returns for both enrollment and completion. These errors are economically meaningful for choices: in a partial-equilibrium counterfactual exercise, correcting beliefs implies large declines in the predicted probability of keeping the currently ranked first choice on top.
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How does college education shape entrepreneurship? We first document striking differences between college fields in the share of students becoming entrepreneurs. We then leverage quasi-random variation in college admissions near GPA-based thresholds to study the causal impact of the college environment on subsequent entrepreneurship. Exposure to more entrepreneurially intensive college programs, measured as a higher share of entrepreneurs among alumni, substantially increases the probability that a student starts their own business.
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This paper reconciles different approaches to estimating the labor market effects of children. Combining elements from event study and instrumental variable estimators we find that while both approaches estimate a 15 percent child penalty, they differ in what drives this gap. The standard event study attributes the penalty primarily to reduced maternal earnings, but our results suggest maternal changes account for less than half. We show that women time fertility as their earnings profile flattens, causing the event study to overestimate the maternal penalty. This finding has broader implications for event-study designs, as pre-trends may be uninformative about selection bias.
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We study how GPA-based and holistic admission tracks in a centralized college market affect programs' degree completion through the information (screening) and selection (sorting) they generate. We validate a simple partial equilibrium model of program admissions by exploiting admission cutoffs and a reform that relaxed caps on holistic seats. We find that programs choose cutoffs and quotas so that marginal completion is similar across tracks when holistic quotas are slack but higher in the holistic track when they bind. A sorting–screening decomposi- tion shows that at the admission margin most gains from holistic admissions come from self-selection of higher-potential students into the holistic track, with modest screening gains. Programs do not internalize admission externalities, and marginal applicants rejected from the holistic track are about 5 percentage points less likely to complete a degree elsewhere than comparable GPA-track rejects, with gaps in selective programs with small holistic quotas twice as high. Expanding holis- tic quotas in constrained programs would thus raise total degree completion, and we find that this favors students with weaker academic records and family back- grounds.
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College graduates tend to marry each other. We use detailed Norwegian data to show that strong assortativity further arises by institution and field of study, especially among high earners from elite programs. Admission discontinuities reveal that enrollment itself, rather than selection, primarily drives matching by institution and field among the college-educated, and that these matches can be economically consequential. Elite professional programs, in particular, propel marginally admitted women into elite household formation: they earn substantially more themselves and match with higher-earning elite partners, becoming much more likely to join the top percentiles of household earnings while also reducing fertility. Marginal elite admission for men yields no change in partner earnings or fertility. College match-making effects are concentrated among students who attend the same institution at the same time, and are larger when opposite-sex peers are more abundant, indicating search costs in the marriage market.
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In this paper we investigate how heterogeneous agents choose among tournaments with different prizes. We show that if the number of agents is sufficiently small, multiple equilibria can arise. Depending on how the prize money is split over the tournaments, these may include, for example, a perfect-sorting equilibrium in which high-ability agents compete in the high-prize tournament, while low-ability agents compete for the low prize. However, there are also equilibria in which agents follow a mixed strategy and there can be reverse sorting, i.e. low-ability agents are in the tournament with the high prize, while high-ability agents are in the low-prize tournament. We show that total effort always decreases compared to a single tournament. However, splitting the tournament may increase the effort of low-ability agents.
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To stimulate investment in training by individuals, the Dutch tax system allows a deduction of out-of-pocket training expenditures from taxable income. This paper investigates to what extent the resulting cost reduction encourages training investments. Two different identification strategies are used. The first strategy uses the progressive structure of the income tax scheme and compares groups with taxable income just above or just below kinks. The second strategy takes advantage of the 2001 tax reform, which implied substantial changes in marginal tax rates. These strategies exploit different sources of exogenous variation and are based on different identifying assumptions. Nevertheless, the results point in the same direction: tax incentives increase training participation.
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