In this paper I propose and estimate a dynamic model of education, borrowing, and work decisions of high school graduates. I examine the effect of relaxing borrowing constraints on educational attainment by simulating increases in the amount students are permitted to borrow from government sponsored loan programs. My results indicate that borrowing constraints have a small impact on * I am grateful to my advisors Joe Altonji, Melissa Tartari, and Fabian Lange for their guidance. I thank Peter Arcidiacono, Bjoern Bruegemann, Lance Lochner, Doug McGee, Tony Smith, and Chris Taber for helpful discussions and suggestions. I would also like to thank seminar participants at the Bureau of Labor Statistics,

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We develop an equilibrium model of the US labor market, fit to Panel Study of Income Dynamics data from 1968-96. Our main innovation is a finer differentiation of types of labor than in prior work (i.e., by occupation, education, gender, and age). This lets us fit wage and employment patterns better than simpler models. We obtain a good fit to wages and occupational choices over the 29-year period while also explaining college attendance rates. We use the model to assess factors driving changes in the wage structure. Occupational demand shifts and shifts in demand for college labor and female labor within occupations are key factors.

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