College drop-out rate is strongly correlated to income: Boston Fed

boston-federal-reserve

A Boston Federal Reserve paper published on Tuesday shows that poorer students are at least 27% more likely to drop out of college than wealthier students.

Ali Ozdagli and Nicholas Trachter, the paper's authors, presents a dynamic model of the decision to pursue a college education in which students face uncertainty about their future income stream after graduation, due to unobserved heterogeneity in their innate scholastic ability.

After students matriculate and start taking exams, they

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