The Demand for College Education in Postwar Japan

Since World War II the number of Japanese college applications has expanded at an impressive rate. This paper concentrates on evaluating the extent to which economic factors underlie this expansion. Salient among the findings are results suggesting that an important segment of the population, whom we call "marginal investors," respond sensitively to shortrun economic factors governing higher education. These factors include direct college costs, the household liquidity constraints, and the probability of entering a large firm. It also appears that the quality of college education has been an important determinant of postwar demand for college education in Japan.