Working Paper: NBER ID: w21065
Authors: John Kennan
Abstract: In the U.S. there are large differences across States in the extent to which college education is subsidized, and there are also large differences across States in the proportion of college graduates in the labor force. State subsidies are apparently motivated in part by the perceived benefits of having a more educated workforce. The paper extends the migration model of Kennan and Walker (2011) to analyze how geographical variation in college education subsidies affects the migration decisions of college graduates. The model is estimated using NLSY data, and used to quantify the sensitivity of migration and college enrollment decisions to differences in expected net lifetime income, focusing on how cross-State differences in public college financing affect the educational composition of the labor force. The main finding is that these differences have substantial effects on college enrollment, and that these effects are not dissipated through migration.
Keywords: Higher Education; Subsidies; Migration; Human Capital; Labor Force
JEL Codes: I22; I23; J24; J61
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Geographical variation in college education subsidies (I24) | College enrollment decisions (I23) |
| Higher state subsidies (H79) | Increased college enrollment (I23) |
| Tuition reductions (I22) | Increased college enrollment (I23) |
| Higher education subsidies (I23) | Educational composition of the labor force (J24) |
| State policies (H79) | Educational landscape of states (I28) |
| State subsidies (H29) | Migration behavior (F22) |
| Acquiring human capital in low-cost locations (J24) | Migration to high-wage areas (J61) |