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Postsecondary Education and Labor Market

Paper Session

Saturday, Jan. 5, 2019 2:30 PM - 4:30 PM

Atlanta Marriott Marquis, L508
Hosted By: American Economic Association
  • Chair: Michael F. Lovenheim, Cornell University

The Impact of Local Labor Market Shocks on Educational Outcomes: Evidence from Plant Closings in Michigan

Daniel Hubbard
American Institutes for Research


Human capital theory suggests that students should pursue more education when the local labor market is struggling, particularly if job losses are disproportionately concentrated among high school graduates, because these circumstances are associated with lower opportunity costs of additional schooling. However, credit constraints and incomplete information about financial aid options can prevent students from receiving their optimal level of education. Using data from the Worker Adjustment and Retraining Notification Act ("WARN Act") on business closings and mass layoffs in Michigan in 2002-2011, I exploit the exogenous variation in local job losses in the year that students graduate from high school, examining changes in college-going rates and substitution between two-year and four-year colleges. A 1-standard deviation increase in per capita job losses is associated with a small but statistically significant 0.2-percentage point (0.3%) increase in the probability of attending college, driven entirely by attendance at two-year colleges; using the WARN job losses as an instrument for local unemployment rates produces similar results with larger magnitudes. The results for the full sample are small, though statistically significant, but effects are larger among some subgroups, such as boys and students with near-median probabilities of attending four-year colleges. This result implies that opportunity costs outweigh credit constraints in guiding students' college-going decisions in the face of a turbulent labor market.

You’re Going to Miss Me When I’m Gone: Assessing the Bias from Only Using In-State Earnings

Andrew Foote
U.S. Census Bureau


Recent research into the effect of post-secondary education on employment outcomes has used administrative data from institutions matched with in-state earnings data. (Engbom and Moser, 2017; Andrews, Li and Lovenheim, 2016; Altonji and Zimmerman, 2017) However, none of these papers have the ability to follow workers outside of the state, which biases measured earnings. While most of these papers acknowledge the issue, they are unable to bound the effect that this non-random attrition has on their results. In addition to these academic papers, a number of states have produced estimates of earnings of graduates matched to in-state earnings data, and are similarly unable to measure workers who move out of the state.
This paper addresses these issues in two ways. First, I document the bias that only having in-state data has on estimates, and how this bias changes over the early career of a graduate, as well as how it differs by field of study and the business cycle. Second, I propose a method based on my bias results, which would allow researchers to bound the size of the effect in their specific setting. I find that bias in earnings differs substantially by field of study, and grows over time. I find weak evidence that the bias is larger during boom periods, but these results are much more noisy

Closing the Gap: The Effect of a Targeted, Tuition-Free Promise on College Choices of High-Achieving, Low-Income Students

Susan Dynarski
University of Michigan and National Bureau of Economic Research
Katherine Michelmore
Syracuse University
C.J. Libassi
Center for American Progress
Stephanie Owen
University of Michigan


Low-income students are unlikely to attend a highly selective college even when they have strong academic credentials. Changing this has the potential to improve college graduation rates and reduce income inequality. With a field experiment, we test an intervention intended to increase the enrollment of low-income students at the highly selective University of Michigan. We contact students (as well as their parents and principals) with an encouragement to apply along with a promise of four years of free tuition and fees upon admission. Materials emphasize that this offer is not contingent on completing aid applications (e.g., the FAFSA or PROFILE). Nearly all admitted students eventually completed aid applications and qualified for more than the promised tuition waiver. Treated students were more than twice as likely to apply to (67 percent vs. 26 percent) and enroll at (27 percent vs. 12 percent) University of Michigan. There was no diversion from schools as (or more) selective as UM; the enrollment effect of 15 percentage points (pp) comprises students who would otherwise attend a less selective four-year college (7 pp), a community college (4 pp), or no college (4 pp). Enrollment effects persist through two years of follow-up. The intervention closed by half the income gaps in college attendance and selectivity among Michigan's high-achieving students. We conclude that an encouragement to apply, paired with an upfront promise of aid, when communicated to both students and influential adults, can substantially reduce socioeconomic differences in college choices.

Do Postsecondary Training Programs Respond to Changes in the Labor Market?

Michel Grosz
Abt Associates


Given dramatic long-term changes in the occupational structure of the labor market in recent decades, it is important to understand whether postsecondary training programs have followed suit. Using administrative records from the nation's largest community college system, I first compare trends in the distribution of degrees and certificates to trends in employment. I then estimate that an occupation whose share of employment grows by one percentage point has its share of community college completions grow by 0.47 percentage points. I show that this relationship is primarily due to increases in student demand rather than to colleges expanding their capacity.
Lesley Turner
University of Maryland
Andrew Barr
Texas A&M University
Benjamin M. Marx
University of Illinois-Urbana-Champaign
Jillian Carr
Purdue University
JEL Classifications
  • I2 - Education and Research Institutions
  • J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers