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We provide evidence that graduated driver licensing (GDL) laws, originally intended to improve public safety, impact human capital accumulation. Many teens use automobiles to access both school and employment. Because school and work decisions are interrelated, the effects of automobile-specific mobility restrictions are ambiguous. Using a novel triple-difference research design, we find that restricting mobility significantly reduces high school dropout rates and teen employment. We develop a multiple discrete choice model that rationalizes unintended consequences and reveals that school and work are weak complements. Thus, improved educational outcomes reflect decreased access to leisure activities rather than reduced labor market access.
Faced with decreasing funds and increasing costs, a growing number of school districts across the United States are switching to four-day school weeks (4DSWs). Although previously used only by rural districts, the policy has begun to gain traction in metropolitan districts. We examine homeowner, teacher, and student outcomes in one of the first metropolitan school districts to adopt the 4DSW. We find 2 to 4 percent home price declines relative to surrounding school districts, a 5 percent decrease in teacher retention for experienced teachers, and a 0.2 to 0.3 standard deviation decrease in student test scores. These results suggest the decision to adopt a 4DSW in a metropolitan setting should not be taken lightly.
Current public pension funding policy has arguably failed on both theoretical and empirical grounds. The traditional actuarial approach elides the risk-return tradeoff at the heart of finance economics and has resulted in steadily rising contribution rates, instead of a sustainable steady state. We propose an economic reformulation of funding policy integrating: (1) steady-state determination of the expected contribution rate, based on an expected return on risky assets and a target funded ratio based on a low-risk discount rate for liabilities; (2) adjustment parameters to achieve convergence toward steady state; and (3) determination of target funded ratio based on policymakers’ revealed preference toward risk, by their choice of asset allocation under a simplified objective function. This provides a new understanding of the basis for pre-funding, in which the perceived net benefits of risky investment may far outweigh the traditional Samuelsonian rationale. Specifically, we find that convexity of the long-run risk-return relationship should lead more risk-tolerant policymakers to pursue higher target funded ratios. We believe our analysis provides the basis for reformulating contribution policy in a way that better supports sustainability and more coherently conveys the tradeoffs consistent with finance economics, and as evaluated by policymakers.
We study the returns to experience in teaching, estimated using supervisor ratings from classroom observations. We describe the assumptions required to interpret changes in observation ratings over time as the causal effect of experience on performance. We compare two difference-in-differences strategies: the two-way fixed effects estimator common in the literature, and an alternative which avoids potential bias arising from effect heterogeneity. Using data from Tennessee and Washington, DC, we show empirical tests relevant to assessing the identifying assumptions and substantive threats—e.g., leniency bias, manipulation, changes in incentives or job assignments—and find our estimates are robust to several threats.
Short-cycle higher education programs (SCPs) can play a central role in skill development and higher education expansion, yet their quality varies greatly within and among countries. In this paper we explore the relationship between programs’ practices and inputs (quality determinants) and student academic and labor market outcomes. We design and conduct a novel survey to collect program-level information on quality determinants and average outcomes for Brazil, Colombia, Dominican Republic, Ecuador, and Peru. Categories of quality determinants include training and curriculum, infrastructure, faculty, link with productive sector, costs and funding, and practices on student admission and institutional governance. We also collect administrative, student-level data on higher education and formal employment for SCP students in Brazil and Ecuador and match it to survey data. Using machine learning methods, we select the quality determinants that predict outcomes at the program and student levels. Estimates indicate that some quality determinants may favor academic and labor market outcomes while others may hinder them. Two practices predict improvements in all labor market outcomes in Brazil and Ecuador—teaching numerical competencies and providing job market information—and one practice—teaching numerical competencies—additionally predicts improvements in labor market outcomes for all survey countries. Since quality determinants account for 20-40 percent of the explained variation in student-level outcomes, quality determinants might have a role shrinking program quality gaps. Findings have implications for the design and replication of high-quality SCPs, their regulation, and the development of information systems.
This paper estimates a dynamic model of college enrollment, progression, and graduation. A central feature of the model is student effort, which has a direct effect on class completion and an indirect effect mitigating risks on class completion and college persistence. The estimated model matches rich administrative data for a representative cohort of college students in Colombia. Estimates indicate that effort has a much greater impact than ability on class completion. Failing to consider effort as an input to class completion leads to overestimating ability’s role by a factor of two or three. It also promotes tuition discounts based on a pre-determined student trait—ability—rather than effort, which can be affected through policy, thus limiting higher education’s potential for social mobility.
Despite the growing popularity of free college proposals, countries with higher college subsidies tend to have higher enrollment rates but not higher graduation rates. To capture this evidence and evaluate potential free college policies, we rely on a dynamic model of college enrollment, performance, and graduation estimated using rich student-level data from Colombia. In the model, student effort affects class completion and mitigates the risk of performing poorly or dropping out. Among our simulated policies, universal free college expands enrollment the most but has virtually no effect on graduation rates, helping explain the cross-country evidence. Performance-based free college triggers a more modest enrollment expansion but delivers a higher graduation rate at a lower fiscal cost. While both programs lower student uncertainty relative to the baseline, performance-based free college does it to a lower extent, which in turn promotes better student outcomes. Overall, free college programs expand enrollment but have limited impacts on graduation and attainment due to their limited impact on student effort.
This paper estimates the heterogeneous labor market effects of enrolling in higher education short-cycle (SC) programs. Expanding access to these programs might affect the behavior of some students (compliers) in two margins: the expansion margin (students who would not have enrolled in higher education otherwise) and the diversion margin (students who would have enrolled in bachelor’s programs otherwise). To quantify these responses, we exploit local exogenous variation in the supply of higher education institutions (HEIs) facing Colombian high school graduates in an empirical multinomial choice model with several instruments. According to our findings, the presence of at least one HEI specialized in SC programs in the vicinity of the student’s high school municipality increases SC enrollment by 3.7-4.5 percentage points (40-50% of the SC enrollment rate). The diversion margin largely drives this effect. For female compliers, enrollment in SC programs increases formal employment relative to the next-best alternative. For male compliers, in contrast, it lowers formal employment and wages. These results should alert policymakers of the unexpected consequences of higher education expansionary policies.
Short-cycle higher education programs (SCPs), lasting two or three years, capture about a quarter of higher education enrollment in the world and can play a key role enhancing workforce skills. In this paper, we estimate the program-level contribution of SCPs to student academic and labor market outcomes, and study how and why these contributions vary across programs. We exploit unique administrative data from Colombia on the universe of students, institutions, and programs to control for a rich set of student, peer, and local choice set characteristics. We find that program-level contributions account for about 60-70 percent of the variation in student-level graduation and labor market outcomes. Our estimates show that programs vary greatly in their contributions, across and especially within fields of study. Moreover, the estimated contributions are strongly correlated with program outcomes but not with other commonly used quality measures. Programs contribute more to formal employment and wages when they are longer, have been provided for a longer time, are taught by more specialized institutions, and are offered in larger cities.
Short-cycle higher education programs (SCPs) form skilled human capital in two or three years and could be key to upskilling and reskilling the workforce, provided their supply responds fast and nimbly to local labor market needs. We study determinants of SCP entry and exit in Colombia for markets defined by geographic location and field of study. We show greater dynamism in the market for SCPs than bachelor’s program, with greater turnover or “churn” of programs. Exploiting data on local economic activity and employment by field of study, we find that higher education institutions open new SCPs in response to local labor market demand as well as competition and costs. SCPs are more responsive to local labor market demand than bachelor’s programs; among SCP providers, private and non-university institutions are the most responsive. While private SCP entry is deterred by the presence of competitors and responds to cost considerations, these responses are weaker among public SCPs. Further, institutions often open and close programs simultaneously within a field, perhaps reflecting capacity constraints. These findings have implications for the regulation and funding of SCP providers.