Working Paper: NBER ID: w18075
Authors: Michael F. Lovenheim; C. Lockwood Reynolds
Abstract: The higher education system in the United States is characterized by a large degree of quality heterogeneity, and there is a growing literature suggesting students attending higher quality universities have better educational and labor market outcomes. In this paper, we use NLSY97 data combined with the difference in the timing and strength of the housing boom across cities to examine how short-run home price growth affects the quality of postsecondary schools chosen by students. Our findings indicate a $10,000 increase in a family's housing wealth in the four years prior to a student becoming of college-age increases the likelihood she attends a flagship public university relative to a non-flagship public university by 2.0 percent and decreases the relative probability of attending a community college by 1.6 percent. These effects are driven by relatively lower and middle-income families. We show that these changes are due to the effect of housing wealth on where students apply, not on whether they are admitted. We also find that short-run increases in home prices lead to increases in direct quality measures of the institutions students attend. Finally, for the lower-income sample, we find home price increases reduce student labor supply and that each $10,000 increase in home prices is associated with a 1.8% increase in the likelihood of completing college.
Keywords: college choice; housing wealth; educational outcomes; income inequality
JEL Codes: I21; I23; J24; R31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Housing wealth increase (R21) | Likelihood of attending flagship public university (I23) |
| Housing wealth increase (R21) | Likelihood of attending community college (I23) |
| Housing price increase (R31) | Direct quality measures of institutions attended (I24) |
| Housing price increase (R31) | Likelihood of completing college for lower-income sample (I24) |