Nonlinear dynamics of higher education participation under social influence and endogenous returns

Decisions to pursue higher education are shaped by economic incentives, peer effects, and expectations about future returns. This paper develops a non-linear dynamic model of educational participation for study fields in which the motivations to enrol are heterogeneous and cannot be reduced to a single driver. Agents allocate resources between education and consumption while their preferences evolve endogenously. Followers are reinforced by aggregate participation, while Positional Agents respond to social distinctiveness and to an endogenous wage premium that declines with the supply of educated workers. We show that the interaction between imitation, positional concerns, and labour-market feedback can generate endogenous cycles and irregular dynamics, especially for intermediate mixtures of behavioural types. Allowing population shares to evolve adds a further source of instability through switching between behavioural rules. Finally, policy interventions are not necessarily stabilizing: counter-cyclical cost subsidies may discipline enrolment, whereas strong behavioural signalling can amplify imitative responses and generate overreaction.