| This dissertation consists of 3 essays that investigate many of the decisions that individuals make concerning their investment in higher education. The first chapter considers the return to majors after controlling for occupation. In addition, the effect of having ‘alignment’ between college major and job type on annual earnings is examined. By examining this alignment premium, we can address whether a college major is human capital or a signal by considering the relationship between work and acquired skills. This chapter considers whether a college major, as a heterogeneous input, is a Signal, General Human Capital, or Specific Human Capital. The main implications of the theory are: (1) Job type and alignment do not affect the return to college majors that are General Human Capital; (2) Job type and alignment do affect the return to college majors that are Specific Human Capital; and (3) The return to college major would decline with additional experience if the college major serves as a signal. The empirical evidence provides support for college majors as General, and in some cases, Specific Human Capital, but little support for the Signaling hypothesis.; The second chapter explores the financial aid process. A theoretical model is developed using a first-price sealed auction model. This model is then evaluated using empirical evidence from the 1996 National Postsecondary Student Aid Study. In particular, it is shown that the increase in total aid resulting from a student getting accepted at a second, third, fourth, and fifth school is approximately {dollar}548, {dollar}456, {dollar}363, and {dollar}270 respectively, after controlling for ability, demographics, and institutional characteristics.; The third chapter examines the demand for higher education institutions. This chapter contributes to the recent empirical literature on discrete choice models of demand estimation in markets with heterogeneous consumers. Some of the more important studies concerning the demand for higher education are discussed and a direction for future research is suggested that allows for a more sophisticated and complete analysis of this decision process. The results of this estimation demonstrate the trade-off students and their families make between the cost, location, and reputation of the colleges and universities. |
