College Cost and Time to Complete a Degree: Evidence from Tuition Discontinuities". NBER Working Paper 12863

This paper questions the way in which university tuition is typically struc-tured as a function of the year of enrollment of a student. The claim is that if continuation tuition were raised, the probability of late graduation would be reduced. This result could be of interest for those universities throughout the world that are concerned by the fact that their students typically graduate beyond the normal completion time. Using a Regres-sion Discontinuity Design on data from Bocconi University in Italy, this paper shows that an increase of 1,000 euro in the continuation tuition reduces the probability of late graduation by 9.9 percentage points with respect to a benchmark average probability of 80%. We conclude sug-gesting that an increase in continuation tuition is efficient when effort is sub-optimally supplied, for instance in the presence of public subsidies to education, congestion externalities and/or peer effects