Essays on the Economics of Education
Authors:   , Sandoy Tróndur Møller 
Published: June 2023

This thesis consists of four self-contained chapters on the economics of education. Chap-ter 1 focuses on the demand for higher education. Chapter 2 studies the effect of absence in Vocational Education and Training. Finally Chapter 3 and 4 are concerned with so-cial interactions. Chapter 3 studies the peer effects in relation to the gender gap for top earners and Chapter 4 studies the effect of alumni networks on labor market outcomes. In Chapter 1, ”Demand for Higher Education and Beliefs on Admission Chances”, I study the effects of reducing capacities for higher education programs on the demand by applicants. I model the applicants problem with a portfolio choice model, where I also explicitly model applicants individual beliefs on assignment probabilities. Using detailed application data covering all the applications for higher education in Denmark in 2014, combined with administrative register data I estimate the preferences of applicants for university programs. With the estimated preference parameters I can run policy experiments, where I reduce capacities for some programs. I compare the results from the policy experiments for two different scenarios, a) where applicants can take the changes to capacities into account and b) the current setting where capacities are only partly revealed ex post, and applicants cannot take them into account. I find that applicants change their preferences to take changes in capacities into account when I allow them to update their beliefs. Further, I find that the changes are not one to one with reductions in capacities and that applicants to other programs also changes their applications in response to ripple effects caused by the implemented matching mechanism. In Chapter 2, ”Absence and Completion among students in Vocational Education”, which is joint work with Fane N. Groes and Edith Madsen, we analyze the effect of school absence on program completion among students in Vocational Education in Denmark. We use data collected on daily student attendance in combination with register data on graduation and background characteristics. As the student absence is likely endogenous in relation to completion, we use an instrumental variable approach to estimate the causal effect. We use different meteorological weather observations as instruments for students’ absence and find that absence has a large and significant negative effect on the probability for completion. We support our results with a second instrument, which is based on the fact that have a panel dimension in student absences, while completion is crossectional. In Chapter 3, ”University Peers and Labour Market Gender Gaps”, which is joint work with Alexander Fischer, Andrei Gorshkov, and Jeanette Walldorf, we investigate how university peers affect the divergence in career paths of male and female students at the top of the income distribution. We use university records covering 21 cohorts of incoming students that are randomly assigned to tutorial groups in Copenhagen Business School and merge it with high-quality administrative register data on students’ careers. We show that females who are assigned to peers of higher ability suffer severe earnings losses, have weaker labor market attachment, are less likely to work in positions with management responsibilities, and to reach the top of the earnings distribution. The negative effect on female careers is more pronounced for high-ability female students and driven by exposure to male peers. To identify mechanisms underlying the effect, we investigate how peer ability shapes education outcomes and fertility behavior. We conclude that the differential reaction of male and female students to academic environ-ments characterized by high-ability peers contributes to labor market gender gaps. In Chapter 4, ”Peers and Careers: Labour Market Effects of Alumni Networks” which is joint work with the same set of coauthors, we study the importance of social connec-tions formed among university peers in terms of shaping their future careers. We use the same data as in Chapter 3. We find that students randomly assigned to the same tutorial group tend to have more similar careers than students from the same cohort but a different tutorial group: they tend to work in the same occupations and industries and are more likely to be hired by the same employer. The strongest ”excess” similarities of tutorial group peers over cohort peers are observed at the most disaggregated level, the workplace. This effect is strong, persistent (although decreasing over time), charac-terized by homophily, and pronounced the most for students from the wealthiest family backgrounds. By comparing the transitions of students to workplaces with incumbent group peers to workplaces with incumbent cohort peers, we find that students benefit from their alumni network by gaining access to more stable and higher-paying jobs.