Beyond Human Capital Theory

While the human capital framework provides a helpful outline of the higher education participation decision, other factors may have to be considered such as distance-related costs, intergenerational factors, financial aid and socioeconomic factors. For example, costs relating to the distance from where a potential student resides relative to HEIs may influence the decision to participate in education, and these costs may include transportation and accommodation costs that accrue due to living away/further from home. Frenette (2006) examined the role of distance on the decision to proceed to university in Canada and found that students living beyond commuting distance were 32% less likely to attend university compared to those living within commuting distance. Sa et al. (2006) used a more robust higher education accessibility measure for young Dutch students to show that living closer to a HEI significantly increased the probability of those leaving upper secondary education pursuing their education at a university or professional college.

Other international studies, including Spiess and Wrohlich (2010) and Gibbons and Vignoles (2012), have also found evidence of important distance effects for Germany and the United Kingdom (UK). The former study found that distance to the nearest university at the time of completing secondary school significantly affected the decision to enrol in a university. The latter used UK data to suggest that geographical distance had little influence on the decision to participate in England but had a strong influence on institutional choice. (Chap. 3 of this book considers these issues and this literature in more detail.) Higher education financial aids such as grants or scholarships may help offset some of the extra costs imposed by tuition fees or from living away from home, which may therefore be expected to have a positive influence on participation. Indeed, Heller (1997), Dynarski (2002) and Deming and Dynarski (2009) all show that higher levels of education grants may have a positive effect on higher education participation.

There is also a considerable literature that considers intergenerational effects on education decisions. Black and Devereux (2011) provide a comprehensive review of this, with the prevailing conclusion that parents have a strong influence on the educational decisions of their children.

This may manifest itself as an individual with higher parental educational attainment showing stronger preferences for education; perhaps because they have first-hand experience of the gains of higher education through their parents and so order their educational preferences accordingly (Cullinan et al. 2013).

The human capital framework of higher education participation also has an implicit assumption of perfect capital markets, which may be relaxed to acknowledge the role of differing capital constraints. This could be because some individuals find it difficult to finance educational investments by borrowing against their potential future earnings. In a world of imperfect capital markets, where this type of borrowing may not be fully available, household income levels may have an important influence on the decision to participate in education or not. The role of household or parental income on a child’s educational decisions is a topic that has generated a great deal of debate in empirical work. In this context, Acemoglu and Pischke (2001) found that an increase in family income was associated with a higher probability of a child participating in higher education. However, Cameron and Heckman (2001) took a different perspective. While they acknowledged the negative association between lower household incomes and education participation, they maintain that it was not as a result of short-term credit constraints but rather due to more long-term factors including cognitive ability and family environment. Carneiro and Heckman (2002) also found that only a small proportion (around 8%) of US school leavers were credit constrained when it came to attending higher education.

The robustness of the labour market may also vary the indirect costs associated with undertaking education and thus influence participation decisions. This relationship will typically present as counter-cynical. In conditions of lower labour demand, the opportunity cost of participating in education is lower and thus a person may have a greater likelihood of staying/continuing in education when the labour market is depressed. The empirical work of McVicar and Rice (2001) and Sievertsen (2016) supports this notion by estimating the relationship between local employment conditions and post-secondary education decisions for the UK and Denmark respectively. The latter specifically showed that this effect was strongest for children of parents without a higher education qualification.

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