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Economics of Higher Education

Paper Session

Sunday, Jan. 5, 2020 8:00 AM - 10:00 AM (PDT)

Marriott Marquis, Malibu City
Hosted By: American Economic Association
  • Chair: Scott Carrell, University of California-Davis

College Attrition and the Dynamics of Information Revelation

Arnaud Maurel
,
Duke University and NBER
Esteban Aucejo
,
Arizona State University
Peter Arcidiacono
,
Duke University and NBER
Tyler Ransom
,
University of Oklahoma

Abstract

This paper investigates the role played by informational frictions in college and
the workplace. We estimate a dynamic structural model of schooling and work decisions,
where individuals have imperfect information about their schooling ability and
labor market productivity. We take into account the heterogeneity in schooling investments
by distinguishing between two-and four-year colleges, graduate school, as well
as science and non-science majors for four-year colleges. Individuals may also choose
whether to work full-time, part-time, or not at all. A key feature of our approach is to
account for correlated learning through college grades and wages, whereby individuals
may leave or re-enter college as a result of the arrival of new information on their
ability and productivity. Our findings indicate that the elimination of informational
frictions would increase the college graduation rate by 9 percentage points, and would
increase the college wage premium by 32.7 percentage points through increased sorting
on ability.

Graduate Student Mental Health: Lessons from American Economics Departments

Paul Barreira
,
Harvard University
Matthew Basilico
,
Harvard University
Valentin Bolotnyy
,
Stanford University

Abstract

We study the mental health of graduate students at Economics PhD programs in the U.S. Using clinically validated surveys, we find that 18% of graduate students experience moderate or severe symptoms of depression and anxiety — more than three times the population average — and 11% report suicidal ideation in a two-week period. The average PhD student reports greater feelings of loneliness than does the average retired American. Only 26% of Economics students report feeling that their work is useful always or most of the time, compared with 70% of Economics faculty and 63% of the working age population. Depression and symptoms of anxiety increase with time in the program: 25% of students in years 5+ of their programs experience moderate or severe symptoms of depression or anxiety compared with 14.5% of first-year students. Many students with significant symptoms of mental distress are not in treatment. We provide recommendations for students and faculty on ways to improve student work conditions, productivity, and mental health.

Isolating peer effects in the returns to college selectivity

Nicolas de Roux
,
University of the Andes
Evan Riehl
,
Cornell University

Abstract

This paper asks how a student's classmates affect her returns to college. We exploit a tracking admission system at a selective Colombian university that led to large differences in mean classmate ability for students in the same programs. In a regression discontinuity design, we find that students in higher-ability classes were more likely to fail courses and drop out, and had lower earnings one decade later. Testable predictions from a human capital model with peer externalities show that individuals learned less in more able classrooms. Our findings suggest that exposure to higher-ability college peers can harm an individual's career trajectory.

Peer Learning in College Applications

Ana Gazmuri
,
Toulouse School of Economics
Elena Prager
,
Northwestern University

Abstract

This paper studies the role of social influence on college application decisions. We look at how the diffusion of information across cohorts regarding college programs and chances of admission affects the application behavior of high-school students. Evidence suggests that students are often under-informed when making college application decisions. This disproportionately affects low-income students, keeping them from making optimal decisions. We use rich microdata from the Canadian province of Ontario on all secondary school students applying to universities to study the extent to which applications are influenced by older cohorts’ decisions. Identifying causal peer-effects is challenging mainly because of reflection problems and correlated unobservables. Our empirical strategy leverages across-cohort variation to examine how students applying and matriculating to college in one year influence students that apply in subsequent years. This mitigates identification concerns related to reverse causality. To deal with correlated unobservables, we use a rich set of fixed effects to control for unobserved differences across schools and types of majors. Furthermore, the richness of our data allows us to construct groups within high-school with a high probability of interaction. Using idiosyncratic variation in admission outcomes, we compare the probability of application to a specific program across students with different exposure to information. We find that a student’s probability of applying to a particular college-major pair doubles when someone in an older cohort from the student’s high school applied to that same program. A large part of this increase is explained by students with peers that have gained admission. These findings are consistent with students learning from their peers about the characteristics and admissions chances to college programs from the experiences of their older-cohort peers. Cross-cohort information diffusion could change the evaluation of long-term effects of policy interventions, since the short-term effects would propagate to later cohorts within the same school.

The Effects of Need-Based Financial Aid on Employment, Earnings, and Receipt of Public Benefits

Deven Carlson
,
University of Oklahoma
Alex Schmidt
,
University of Wisconsin-Madison
Barbara L. Wolfe
,
University of Wisconsin-Madison

Abstract

The arguments for need-based aid have focused on increasing postsecondary access and completion for low-income students, and, ultimately, facilitating their transition into the labor force. But another argument is that such aid is an investment that will return positive benefits in terms of increased labor market earnings and hence taxes, and also reduce the use of means tested benefits. In this perspective such aide may result in positive returns both to the individual and to society.

To date, a fairly substantial body of work estimates the effect of need-based aid on postsecondary access and attainment (e.g. Castleman and Long 2013; Hillman et al. 2018; Goldrick-Rab et al. 2016; Anderson and Goldrick-Rab 2018; Angrist et al. 2016; Page et al. 2017; Page et al. 2018)—much of it returning evidence of small but meaningful positive effects—but there has been very little work examining how need-based financial aid affects students’ economic outcomes in their post-college years. Here we analyze the influence of a sizable increment in financial aid to college students already receiving a Pell Grant who are enrolled in their first semester in a two- or four-year public institution. We estimate the effect of this need-based aid offer on student employment, earnings, and participation in public assistance programs, namely Temporary Assistance for Needy Families (TANF), the Supplemental Nutrition Assistance Program (SNAP), and Unemployment Insurance (UI). We estimate these effects separately for students attending 4-year universities and two-year institutions, both colleges and technical schools. In addition to estimating the effect of the financial aid offer—the intention-to-treat (ITT) parameter—we also estimate the effect of actually receiving need-based aid in the first semester of eligibility, or the treatment-on-the-treated (TOT) parameter. We estimate this parameter in an instrumental variables (IV) framework, using the randomized aid offer as an instrument for receipt of need-based aid.

The Returns to Specialization: Evidence from Education-Occupation Match in the United States

Xin Jin
,
University of South Florida
Joshua Kaisen
,
University of South Florida

Abstract

How do college majors translate into occupations over time? Are college graduates with a certain major going to wider or narrower sets of occupations? What are the implications of the returns to certain major-occupation mapping? We investigate these questions using detailed data on majors and occupations from the National Survey of College Graduates from 1993 to 2017. We find that, over the past quarter-century, the college major-occupation mapping is remarkably stable with cyclical fluctuations around the recession years. This cyclicality is most pronounced among the majors with the highest occupational variety. In addition, college-graduate men tend to have majors that map to a concentrated set of jobs relative to college-graduate women. Furthermore, the wider a major’s occupation variety is, the lower the wage is for both men and women with that major. That is, there is a positive return to specialization. This wage effect also works partly through employment where men and women with majors with greater occupational variety are less likely to be employed full time. We also document some structural changes after the Great Recession that new graduates in degree fields that are remote to finance jobs tend to stay in their specialized field, while veterans in those fields branch out to other occupations.
JEL Classifications
  • I2 - Education and Research Institutions