When Meritocracy Fails: College Expansion and the Rise of Intergenerational Persistence

This paper quantifies the effects of college expansion under purely merit-based, competitive admissions, endogenizing pre-labor-market conditions. We develop a heterogeneous-agent life-cycle model where parents invest in their children’s pre-college human capital at multiple stages to compete for limited college slots. Applying the framework to China---where admissions rely solely on score ranks and enrollment has grown tenfold over the past 25 years---we find that score-based meritocracy raises the importance of cultivated human capital at the college-admission stage relative to initial skill, sorting children not only by merit but also by family affluence. Expanding college access under this system reduces intergenerational mobility because higher-income families respond by disproportionately increasing pre-college investments, strengthening the link between child achievement and parental income. Counterfactuals show that mobility would improve with college expansion if endogenous parental investment responses were shut down.