CSMGEP Dissertation Session
Friday, Jan. 7, 2022 10:00 AM - 12:00 PM (EST)
- Chair: Kalena Cortes, Texas A&M University
Redesigning Federal Student Aid in Higher Education
AbstractIn this paper, we study the equilibrium impact of student aid in the United States market for sub-baccalaureate higher education and consider the implications of alternative aid policies.
We document that the current federal aid system, by subsidizing marginal price increases, incentivizes private for-profit colleges to charge high tuition prices.
We also present new descriptive evidence on the importance of advertising in the demand for higher education.
Using these facts, we estimate a structural model of supply and demand in this market.
We then derive an optimal voucher policy that maximizes educational quality, holding the quality of schools fixed.
We measure quality by estimating the value-added in earnings generated by each sub-baccalaureate college.
Counterfactual results show that the optimal voucher system improves the overall quality provided by 8.8%.
Our optimal voucher policy highlights the fact that for-profit colleges, despite being lower quality on average, are more effective at increasing enrollment than public community colleges.
Consequently, these schools play an important role in improving the educational outcomes of students.
The Value of School Social Climate Information: Evidence from Chicago Housing Transactions
AbstractFor the past decade, the federal government and an increasing number of states and school districts across the US have begun to invest and focus on the social, learning, and working conditions (school climate) experienced by students, families, and teachers. Despite this trend, causal research on whether and how much various stakeholders value school climate is limited. In this paper, I investigate how publicizing school climate information is capitalized into the housing market and how it affects the sorting of homebuyers from different socioeconomic backgrounds. Using a plausibly exogenous shock of school climate information in Chicago, I employ event studies and a difference-in-differences framework. I find that providing this information publicly leads to an overall house price increase of 2% for a one-level-higher school climate rating. Additionally, I find a 2% increase in the average income of new homebuyers moving into neighborhoods assigned to a one-level-higher school climate rating. These effects are almost entirely driven by transactions in attendance zones with better-climate schools. These initial effects dissipate over time, as information becomes less salient. The effects are consistent across different types of schools and neighborhoods. I explore various potential mechanisms for these effects. I find evidence that homebuyers value this dimension of school quality that has been understudied in the revealed preferences literature.
Is College Worth It For Me? Beliefs, Access to Funding, and Inequality in Higher Education
AbstractIn the US, the bachelor's attainment rate of high socioeconomic status White youth is much
higher than that of Hispanic, Black, and low-socioeconomic status youth. This is true even
among students with high academic ability scorers. For high-scorers, how much of these gaps
in bachelor's attainment can be explained by differences in subjective beliefs about own academic
ability? Relatedly, is targeting information and funding to low socioeconomic status
high-scorers more efficient at narrowing overall bachelor's attainment gaps than universal
policies like free college for all, or better information for all? To answer these questions,
I estimate the distribution of subjective prior beliefs about own ability using self reported
beliefs about college outcomes from the NLSY97 and a dynamic discrete choice model with
heterogeneous financial support and beliefs about one's ability. I nd that for Hispanic and
low-socioeconomic status youth, differences in beliefs explain 38-49% of the gap relative to
high-socioeconomic status White high-scorers. In contrast, for Black high-scorers beliefs play
almost no statistically significant role in explaining gaps. In a policy analysis I show that
a targeted policy, providing information and funding to low-socioeconomic status youth can more efficiently narrow bachelor's attainment gaps than free college for all, where the gap narrows between 25% to 42% depending on the comparison group. The remaining overall gap persists due to differences
in early human capital stock by demographic group, suggesting targeting information
frictions can narrow but not eliminate inequality in higher education.
Michael F. Lovenheim,
Lesley J. Turner,
- I0 - General