Formation of College Plans: Expected Returns, Preferences and Adjustment Process

We exploit a large exogenous shock to study the determinants of college attendance and role played by one's environment. analyze whether, how quickly, adolescents' plans are adapted, explore factors leading adjustment, examine these ultimately impact later educational attainment. Using differences across East German cohorts induced timing Reunification (a change for from state socialism capitalist democracy), we show that shortly after relative before time, among high-school students increased substantially, which was followed sizable increases in completion entrance certificate five years later. Our analysis sheds light on elasticity beliefs preferences different youths case shock. Perceived returns, economic (consumerism) sociopolitical attitudes (individualism) adapt quickly response directly linked changes outcomes. Cohorts closer critical junctions at time Reunification, however, adjusted their much lesser extent. While they similarly updated expected returns education, exhibited slower adjustment younger cohorts.