On the returns to for-profit colleges
As student debt grows and the labor market stagnates, a growing body of research seeks to answer questions about the worthiness of college. What characterizes the schools and populations for whom college is worth it? What does worthiness mean—financial, intellectual, for individuals, for society as a whole? A key way to examine these questions is to find evidence on the financial returns to college. Douglas Webber examines the question along lines of ability, major, and debt, and explores the question for marginal students; JFI’s Sidhya Balakrishnan and Barry Cynamon looked at the way that returns vary based on the type of financing (loans, IDR, ISAs).
A new paper from STEPHANIE CELLINI and NICHOLAS TURNER uses administrative data to examine the returns to public college vs. for-profit college certificate programs. The key finding is that “for-profit certificate students experience lower earnings and employment post-college than their public sector counterparts,” but the richness of the data allows for many more surprising conclusions as well: one is that for-profit college may actually have worse returns than no college whatsoever; another is that for-profits may have worse effects for women than for men. From the paper:
“Across the board, our results show that despite the much higher costs of attending a for-profit institution, the average for-profit certificate student experiences lower earnings effects relative to public sector students. For-profit colleges outperform public institutions in only one of the top ten for-profit fields—cosmetology. Further, students in online and chain for-profit institutions appear to fare worse than students in more traditional campus-based and independent institutions. Our institution-level regressions reveal that the weak performance of the for-profit sector is not limited to a few poor performing institutions, rather the majority of schools appear to have negligible average earnings effects.”
The full paper is available in the Journal of Human Resources here.
- Scott Cunningham wrote a substantial tweet-thread summary, available here. “I’d include this paper when sorting through the human capital vs signaling debate. This is arguably pure credentialing… So why are the returns so bad if it’s also a credential? I’d be curious how proponents of the ‘education is only signaling’ hypothesis reacted to this study.” For more on that debate, see our previous JFI letter.
- How can for-profit colleges be held accountable for poor returns to the educations that they provide? A 2016 report from Davids J Deming and Figlio explains the successes and failures of Obama’s Gainful Employment Act, and suggests the importance of financial “skin in the game” for all kinds of institutions. Link.
- A new data explorer from the Urban Institute brings together an array of education data sets. Link.
- Cellini and Turner’s piece examines certificate programs at for-profits. For more on certificate programs, see our March letter on the work of Di Xu and Madeline Trimble, and our May letter on the many non-Title-IV certificates, certifications, and credentials about which there is almost no data.
Informal domestic work in Argentina
Brian Feld, PhD student in Economics at the University of Illinois, studies informal labor markets in low and middle income countries. His job market paper examines the impact of a 2013 policy aimed at formalizing the work of domestic laborers in Argentina.
From the introduction:
"I find that after the reform formality rates among domestic workers went from 16% to 22%, a 36% increase. Despite the increase in formality rates, I do not find changes in unemployment among domestic workers, although I do observe a reduction of 3.4% in hours of work per week from a baseline of almost 25 hours. Labor earnings per month do not decrease but rather increase approximately 4% after the reform, which implied that earnings per hour increased by almost 8%. The increase in earnings suggest that the formalization also led employers to comply with other labor regulations, such as minimum wages.
I also study the impacts of the policy change on the educational outcomes of children of domestic workers. Among boys, I find an increase of 2.6% in school attendance (a 3.1% increase), a 4.2% increase in years of education (from a pre-reform average of 8 years), and a 7.3% increase in secondary school completion (which corresponds to a 20% increase from pre-reform values) among male children. On the other hand, I do not observe significant impacts of the reform on schooling outcomes among girls."
Each week we highlight great work from a graduate student, postdoc, or early-career professor. Have you read any excellent research recently that you'd like to see shared here? Send it our way: firstname.lastname@example.org.
- New on the Phenomenal World: part one of Digital Ethics fellow Lily Hu's enthusiastically received deep dive into the problems with causal counterfactual reasoning about racial discrimination. Link.
- On 18 October at 3PM, Zachary Parolin will be visiting the JFI offices in New York to lead a research session covering his recent work on automation and unions. If you're interested in joining, please sign up here.
- "It has been difficult for environmentalists to engage with either carbon removal or solar geoengineering in a forward-thinking way. Part of this is due to a fixation on the immediate need to see emissions peak — but part of it also has to do with some serious limitations in how we think." In a new post, Holly Jean Buck argues for active public participation in climate policy. Link.
- "In this paper, we leverage the quasi-random movement of New York City police commanders across police precincts to estimate the net impact of stop and frisk policing on students’ long-run educational attainment. We find that increased exposure to police stops has negative effects on high school graduation, college enrollment, and college persistence. These effects are substantially larger for black students, the racial group overwhelmingly stopped by police." By Andrew Bacher-Hicks and Elijah de la Campa. Link. ht Sidhya
- David Walters and Michael Quinlan document "the struggle of coalminers for mine safety in Australia and New Zealand from 1871-1925." Link.
- "The U.S. economy has recently experienced two, seemingly unrelated, phenomena: a large increase in post-retirement life expectancy and a major expansion in securitization and shadow banking activities. We argue they are intimately related. When expecting to live longer, agents rely more heavily on intermediaries that use securitization, with riskier but higher returns." New NBER publication by Guillermo Orgoñez and Facundo Piguillem. Link. (And link to an ungated version from 2017.)
- On VoxTalks, Nathan Sussman discusses the early financial development of London, dispelling the common misconception that the city only emerged as a financial center in the late 17th century. Link.
- A new report by Fatih Guvenen, Gueorgui Kambourov, Burhan Kuruscu, Sergio Ocampo, and Daphne Chen at the Center for Equitable Growth concludes that "wealth taxation has the potential to raise productivity while simultaneously reducing consumption inequality." Link.
- The first three volumes of the History of Cartography have been made free and available for download by the University of Chicago Press. Inside: Cartography in Pre-historic, Ancient, and Medieval Europe and the Mediterranean, and South East Asian, South Asian, African, American, Arctic, Australian, and Pacific societies. Link.
- "One approach to justice in algorithmic prediction is to attempt to make it more like Laplace’s omniscient demon, and less like his rule of succession; from this perspective, better predictions – based on causal models – are fairer predictions." Reuben Binns looks to Laplace's 1814 "Sunrise Problem" to frame contemporary debates over algorithmic fairness. Link.
- "It took the UK about a century and a half to increase its GDP per capita by half as much as China did in less than 40 years." At VoxEU, Li Yang, Filip Novokmet, and Branko Milanovic examine the transformation of Chinese urban elite between 1988 and 2013. Link.
- "This paper provides evidence of the long-run effects of a permanent increase in agricultural productivity on conflict. We construct a newly digitized and geo-referenced dataset of battles in
Europe, the Near East and North Africa covering the period between 1400 and 1900 CE. For variation in permanent improvements in agricultural productivity, we exploit the introduction of potatoes from the Americas to the Old World after the Columbian Exchange." Link to the paper by Murat Iyigun, Nathan Nunn, and Nancy Qian. For related work by Nunn and Qian, see the end of this previous letter.