This paper studies the design of higher education policies targeted at improving teacher recruitment. I leverage the introduction of a policy in Chile that aimed to raise teacher quality by combining financial incentives and admission standards. Exploiting the sharp assignment rule I estimate that, at the threshold, enrollment of high performing students at teacher colleges increased by 42%, with low-income students coming disproportionately from non-enrollment. The policy generated a positive composition effect of 0.25SD in the scores at the college entry exam, which led to an increase in 0.11SD in Teacher Value Added and 0.12SD in Teaching Skills. I develop a demand and supply model of higher education that embeds a novel method for solving discrete-continuous games in large markets. Counterfactual policies lead to increases of up to 6.6% in the test scores of students enrolled at teacher colleges, and up to 27% in Teacher Value Added. Targeting the policy to low-income students yields further gains in Teacher Value Added at no additional cost.

This paper examines the effects of Free College policies on student enrollment and academic performance, with a focus on the 2016 Chilean reform that granted tuition-free higher education to students from the lowest five income deciles. Using a difference-in-differences approach, we find that Free College increased enrollment and persistence in higher education but had modest effects on graduation and dropout rates. To disentangle the role of student effort from selection effects, we develop a structural model in which students choose effort levels in response to financial incentives. Our results highlight that while Free College expands access, it may also weaken performance incentives due to the removal of academic progress requirements. Counterfactual simulations suggest that alternative funding mechanisms could improve both access and academic outcomes by balancing affordability and incentives for effort.

This paper studies the roles of financial constraints and information frictions in enrollment and progression in higher education. Our results show that subsidies increase university access, peers enhance enrollment and match quality, and parental exposure to university causally affects children’s university enrollment. We build a dynamic structural model that quantifies these mechanisms and evaluates equity-oriented education policies.