Degree Name

Master of Science

Graduate Program

Economics

Advisor

Scott Gilbert

Abstract

Previous findings of economic literature pointed out that there is significant correlation of family characteristics and family background with an individual’s rational choice of education. However, variable of abilities was omitted.

This study develops and estimates the model of rational choice of college attendance with respect to agent’s individual and family characteristics as well as abilities to meet college requirements.

Paper concludes significant impact of an individual’s cognitive abilities on his rational educational choice. Additional finding is that gender of individual has dual effect on his educational choice. First is negative via income mechanism. And the second is positive via motivation mechanism to compensate an income gap.

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