Working Paper: NBER ID: w29276
Authors: Jack Mountjoy; Brent R. Hickman
Abstract: Students who attend different colleges in the U.S. end up with vastly different economic outcomes. We study the role of relative value-added across colleges within student choice sets in producing these outcome disparities. Linking high school, college, and earnings registries spanning the state of Texas, we identify relative college value-added by comparing the outcomes of students who apply to and are admitted by the same set of institutions, as this approach strikingly balances observable student potential across college treatments and renders our extensive set of covariates irrelevant as controls. Methodologically, we develop a framework for identifying and interpreting value-added under varying assumptions about match effects and sorting gains. Empirically, we estimate a relatively tight, though non-degenerate, distribution of relative value-added across the wide diversity of Texas public universities. Selectivity poorly predicts value-added within student choice sets, with only a fleeting selectivity earnings premium fading to zero after a few years in the labor market. Non-peer college inputs like instructional spending more strongly predict value-added, especially conditional on selectivity. Colleges that boost BA completion, especially in STEM majors, also tend to boost earnings. Finally, we probe the potential for (mis)match effects by allowing value-added schedules to vary by student characteristics.
Keywords: No keywords provided
JEL Codes: C21; H75; I23; I24; I26; J24; J31; J62
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| students who apply to and are admitted by the same set of colleges exhibit similar vertical potential (D29) | differences in graduation rates and earnings across colleges reflect active institutional impacts (D29) |
| moving up one standard deviation in the value-added distribution (D39) | 37 percentage point increase in the probability of completing a BA (D29) |
| moving up one standard deviation in the value-added distribution (D39) | $1,300 boost in annual earnings around age 28 (J31) |
| selectivity poorly predicts value-added within student choice sets (C52) | students attending more selective colleges do not necessarily achieve better outcomes than those at less selective colleges (D29) |
| non-peer college inputs, such as instructional expenditures (D29) | positively correlate with value-added (D46) |
| mismatch effects (C52) | little evidence of substantial heterogeneity in value-added schedules across students (D29) |
| mismatch effects (C52) | slight negative impact on Black students attending more selective colleges (I24) |
| presence of historically Black colleges (I29) | yield above-average value-added (D46) |