Aftermarket Frictions and the Cost of Off-Platform Options in Centralized Assignment Mechanisms

51 Pages Posted: 18 Jul 2022 Last revised: 4 Sep 2022

See all articles by Adam Kapor

Adam Kapor

Princeton University

Mohit Karnani

Massachusetts Institute of Technology (MIT)

Christopher Neilson

Yale University

Date Written: July 2022

Abstract

We study the welfare and human-capital impacts of the configuration of on- and off-platform options in the context of Chile’s centralized higher education platform, leveraging administrative data and two policy changes: an expansion of the number of on-platform slots by approximately 40% and the introduction of a large scholarship program. We first show that more programs’ joining the platform led students to start college sooner and raised the share of students who graduated on time. We then develop a model of college applications, offers, waitlists, and matriculation choices, which we estimate using students’ ranked-ordered applications, on- and off-platform enrollment, and on-time graduation outcomes. When more programs join the platform, welfare increases, and the extent of aftermarket frictions matters less for welfare, enrollment, and graduation rates. High-SES students have greater access to off-platform options, and gains from platform expansion are larger for students from lower-SES backgrounds. Our results indicate that expanding the scope of a higher education platform can have real impacts on welfare and human capital.

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Suggested Citation

Kapor, Adam and Karnani, Mohit and Neilson, Christopher, Aftermarket Frictions and the Cost of Off-Platform Options in Centralized Assignment Mechanisms (July 2022). NBER Working Paper No. w30257, Available at SSRN: https://ssrn.com/abstract=4165329

Adam Kapor (Contact Author)

Princeton University ( email )

22 Chambers Street
Princeton, NJ 08544-0708
United States

Mohit Karnani

Massachusetts Institute of Technology (MIT)

Christopher Neilson

Yale University ( email )

New Haven, CT 06520
United States

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