Skill-Biased Technical Change and the Cost of Higher Education

John Bailey B. Jones, Fang Yang
2012 Social Science Research Network  
We document the growth in higher education costs and tuition over the past 50 years. To explain these trends, we develop a general equilibrium model with skilland sector-biased technical change. We assume that higher education su¤ers from Baumol's (1967) service sector disease, in that the quantity of labor and capital needed to educate a student is constant over time. Finding the model's parameters through a combination of calibration and estimation, we show that it can explain the rise in
more » ... ain the rise in college costs between 1961 and 2009, along with the increase in college attainment and the increase in the relative earnings of college graduates. We ...nish by using the model to perform a number of numerical experiments.
doi:10.2139/ssrn.2167037 fatcat:yt5oa6vlurf57bvks5kae3wpoa