EduQuant seminar: Mikkel Høst Gandil on Substitution effects in college admissions

EduQuant would like to invite you for our seminar, where Mikkel Høst Gandil will present some of his work on substitution effects in college admissions. 

Abstract

I show how local supply changes create ripple effects in a national educational market. Admitting an applicant to a program will free up a slot to be filled at her next-best alternative. To investigate such substitution effects I re-engineer the centralized admission system of the Danish tertiary education sector and simulate thousands of equilibria under counterfactual supply. I estimate potential earnings with a regression discontinuity design and quantify market-clearings. On average, a change of 10 slots leads to 15 applicants moving and substitution effects explain 40 percent of the variation in earnings. Substitution externalities are generally positive but vary in sign and magnitude. Using linear programming to compute unconstrained optima of the social planner I find that 8 percent of aggregate earnings are forgone by respecting the preferences of applicants and programs.

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