Competition for limited seats in prestigious colleges generates a "rat-race" equilibrium effect, driving demand for parental investment. I develop and estimate a dynamic tournament model where each household chooses tutoring quality, tutoring hours, and student self-study hours. The model explains persistently high educational investment despite modest effects on test score, as students maintain investment to avoid dropping to lower tiers. Using the estimated model, I find that while parental investment reinforces earnings persistence across generations, self-study acts as a moderating force. Counterfactual analysis shows expanding elite college seats by 50% reduces tutoring expenditure by 25%.

Presented at: Hitotsubashi University, Stone Center at U Chicago, GRIPS, Toulouse Economics of Education workshop, University of Southampton, SOLE, SEHO, Kansai Labor, Yokohama National University, Korea University, Mannheim Family Economics Workshop, UNSW, ANU, Kyoto U, IAAE, University of Gothenburg, Missouri University S&T,  KDI, KIEP, KLI, SEA, DSE Summer School, AASLE, SBU Game Theory, WEAI

Using predicted wages from 18 CPS data waves between 1962 and 2019, we use local linear regression estimates of each spouses predicted wage as a function of his/her spouses wage and show how they have changed over time. We look further into issues such as how much of assortative mating on wages can be explained by assortative mating on education and when, in a couples lifetime, wages should be observed. We find strong evidence of assortative mating in both wages and education with assortative mating in education explaining much of the assortative mating in wages. We find that using wages at the time of marriage causes significant measurement problems as they do not reflect the true long-term expected variation in wages. Finally, we find that most of the assortative mating occurs at relatively low values of wages.

We propose easy econometric methods to test for positive assortative mating. Compared to existing methods such as by Siow (2015), our procedure avoids the cost associated with imposing positive assortative mating restrictions, and it allows for more general tests. The test does not require numerical optimization, and the test statistics can be calculated easily. We compare the power of the tests using simulation. The empirical application suggests that the null hypothesis of no assortative mating is rejected for selected years of CPS data that range from 1962 to 2019.

Compulsory public education is a common policy tool to achieve greater participation in education, particularly from marginalized groups. The COVID-19 pandemic brought unprecedented school closures around the globe. Households seek their own mitigation strategy against education loss via private substitutes. We use the COVID-19 response of South Korea as a laboratory for investigating the effects of pandemic-induced school closure on parental investment and educational outcomes. Specifically, we exploit the school-level variations in in-person learning days driven by government and local authorities. Combining administrative data and longitudinal survey, our fixed effects regression identifies that losing 10 additional days implies a 9.5% increase in private education expenditure. In addition, we build and estimate a structural model tournament to quantify the impact of school closure on educational inequalities. A counterfactual experiment suggests that a $450 voucher for private tutoring may compensate for the test score loss caused by a 20-day loss of in-person schooling. Our results shed light on how households make schooling decisions and have implications on the longer-run educational inequality induced by the pandemic. Methodologically, we propose an estimation algorithm that tightly links the natural experiment estimates and the structural model.