Degrees of Money
Incentivizing STEM participation: Evidence from the SMART Grant Program
Margaret Blume-Kohout & Jacob Scott
Southern Economic Journal, forthcoming
Abstract:
The U.S. National Science and Mathematics Access to Retain Talent (SMART) Grant program provided up to $8000 to high-achieving, low-income undergraduates majoring in STEM fields. We evaluate the effects of this financial incentive on college graduates' major fields and subsequent STEM workforce retention using nationally-representative survey data and a difference-in-differences quasi-experimental approach. The SMART Grant program significantly increased the probability that first-generation college graduates majored in STEM, by about 7 percentage points. However, this increase is almost entirely offset by affected STEM graduates' significantly lower STEM workforce retention. These program effects also appear to be concentrated among students whose parents had some college experience rather than those who were first in their families to attend college.
Post-purchase Federal Financial Aid: How (in)Effective is the IRS’s Student Loan Interest Deduction (SLID) in Reaching Lower-Income Taxpayers and Students?
Manuel González Canché
Research in Higher Education, September 2022, Pages 933–986
Abstract:
Federal financial aid policies for higher education may be classified based on their “for-purchase” and “post-purchase” natures. The former include grants, loans, and workstudy and intend to help students finance or afford college attendance, persistence, and graduation. Post-purchase policies are designed to minimize financial burdens associated with having invested in college attendance and are granted as tax incentives/expenditures. One of these expenditures is the IRS’s Student Loan Interest Deduction (SLID) — which offers up to $2500 as an adjustment for taxable income based on having paid interest on student loans and has an annual cost of $12.81 billion — about 45.7% of the Pell grant cost. Despite this high cost, SLID has remained virtually unstudied. Accordingly, the study’s purpose is to assess how (in)effective SLID may be in reaching lower-income taxpayers. To address this purpose, we relied on an innovative analytic framework “multilevel modelling with spatial interaction effects” that allowed controlling for contextual and systemic observed and unobserved factors that may both affect college participation and may be related with SLID disbursements over and above income prospects. Data sources included the IRS, ACS, FBI, IPEDS, and the NPSAS:2015–2016. Findings revealed that SLID is regressive at the top, wealthier taxpayers and students attending more expensive colleges realize higher tax benefits than lower income taxpayers and students. Indeed, 75% of community college students were found to not be eligible to receive SLID — data and replication code (https://cutt.ly/COyfdKC) are provided. Is this the best use of this multibillion tax incentive? Is SLID designed to exclude the poorest, neediest students? A policy similar to Education Credits, focused on outstanding debt rather than on interest, that targets below-poverty line students with up to $5000 in debt, would represent a true commitment, and better use of public funds, to close socioeconomic gaps, by helping those more prone to default.
The signaling value of university rankings: Evidence from top 14 law schools
Matthew Naven & Daniel Whalen
Economics of Education Review, August 2022
Abstract:
This paper measures the impact of signaling on labor-market outcomes by estimating the labor-market effects of attending a U.S. News & World Report Top 14 (T14) law school. Utilizing data from the American Bar Association on class profiles, we use the value added with drift methodology to estimate the causal impact of attending a particular law school and then use a regression discontinuity methodology to estimate the difference in value added between T14 and non-T14 law schools that is attributable to T14 status. We find that T14 law schools confer no signaling effect on the Bar exam, which is graded blindly, but a substantial signaling effect on employment at “Big Law” firms with more than 250 attorneys, which pay some of the highest salaries in the law profession. The lowest-ranked T14 university increases the likelihood of Big Law employment by 30 percentage points (96%) more than the highest-ranked non-T14 university. This likely reflects asymmetric information in the labor market for lawyers, and thus graduating from a T14 law school serves as a signal of a lawyer’s ability.
Price Discrimination and Public Policy in the U.S. College Market
Ian Fillmore
Review of Economic Studies, forthcoming
Abstract:
In the United States, the federal government grants colleges access to a student’s Free Application for Federal Student Aid (FAFSA) which facilitates substantial price discrimination. This paper is the first to estimate the consequences of allowing colleges to use the FAFSA in their pricing decisions. I build and estimate a structural model of college pricing and simulate counterfactuals wherein some or all of the FAFSA information is restricted. I find that if FAFSA information were restricted, 13 percent of students attending elite colleges would be inefficiently priced out of the elite market. Nevertheless, student welfare would rise as colleges charged the majority of students lower prices. Colleges do use the FAFSA to transfer resources from high- to low-income students on average, but this redistribution is highly imprecise: allowing colleges to use the FAFSA harms one-third of low-income students while one in seven high-income students actually benefit.
The Impact of COVID-19 on Community College Enrollment and Student Success: Evidence from California Administrative Data
George Bulman & Robert Fairlie
Education Finance and Policy, forthcoming
Abstract:
This paper examines how the pandemic impacted the enrollment patterns, fields of study, and academic outcomes of students in the California Community College System, the largest higher-education system in the country. Enrollment dropped precipitously during the pandemic—the total number of enrolled students fell by 11 percent from Fall 2019 to Fall 2020 and by another 7 percent from Fall 2020 to Fall 2021. The California Community College system lost nearly 300,000 students over this period. Our analysis reveals that enrollment reductions were largest among black and Latinx students, and were larger among continuing students than first-time students. We find no evidence that having a large online presence prior to the pandemic protected colleges from these negative effects. Enrollment changes were substantial across a wide range of fields and were large for both vocational courses and academic courses that can be transferred to four-year institutions. In terms of course performance, changes in completion rates, withdrawal rates, and grades primarily occurred in the spring of 2020. These findings of the effects of the pandemic at community colleges have implications for policy, impending budgetary pressures, and future research.
Teacher Effectiveness and Classroom Composition: Understanding Match Effects in the Classroom
Esteban Aucejo et al.
Economic Journal, forthcoming
Abstract:
This paper provides evidence of match effects in the teacher labour market by considering how teacher effectiveness varies by classroom composition. We combine random assignment of teachers with rich measures of teaching practices based on a popular teacher-evaluation protocol to overcome endogeneity challenges. We find significant complementarities between teaching practice and classroom composition for maths achievement. We use these estimates to simulate the effects of reallocating classrooms among teachers within schools and find substantial differences between counterfactual and actual teacher effectiveness rankings. These findings support the importance of classroom composition for key teacher-related policies, including teacher allocations, accountability, and training.
Economic and Racial Integration Through School Choice in New York City
Jesse Margolis, Daniel Dench & Shirin Hashim
Educational Evaluation and Policy Analysis, forthcoming
Abstract:
New York City’s school system is among the most diverse and segregated in the United States. Using difference-in-differences and placebo tests, we evaluate two desegregation policies in two geographic districts in New York City, District 3 and District 15. Both districts attempted to lower economic segregation within their district while maintaining school choice, prioritizing economically disadvantaged students for middle school seats in advance of the 2019–2020 school year. District 15, however, set more ambitious prioritization targets and also chose to eliminate academic screens from all middle schools. We find that District 15’s policy lowered economic segregation in sixth grade by 55% and racial segregation by 38%, while District 3’s policy led to no significant change in segregation.
Local Labor Markets and Job Match Quality: Teachers
Rebecca Cannon Fraenkel
Labour Economics, forthcoming
Abstract:
This paper examines how short-term variation in potential teachers’ outside options affects who chooses to teach in public schools. I use variation in state level unemployment rates as a source of plausibly exogenous variation in outside options available to first-year teachers among teachers surveyed in the NCES School and Staffing Survey. I find that those who become teachers when the local labor market is weak are both more likely to have come from highly selective colleges and more likely to express dissatisfaction with their jobs. Other observable demographic, educational, and certification characteristics of newly hired teachers are not affected. Teachers who enter during weaker labor markets are also no less likely to remain in teaching in the short run. Economic downturns provide a potential opportunity for schools to attract and retain academically talented workers, but this may come at a cost to those workers in the form of reduced job satisfaction.
Another One Rides the Bus: The Impact of School Transportation on Student Outcomes in Michigan
Danielle Sanderson Edwards
Education Finance and Policy, forthcoming
Abstract:
School transportation may increase student outcomes by providing a reliable and safe means of getting to and from school. Little evidence of the effects of such policies exists. In this paper, I provide some of the first causal evidence of transportation impacts on student attendance and achievement using a rich panel of student-level enrollment and address data for Michigan public school students and a unique dataset of district transportation policies for the largest 50 districts in Michigan. I exploit the walking distance cutoffs that determine transportation eligibility using a regression discontinuity design. I find that transportation eligibility increases attendance rates and lowers the probability of chronic absence. These effects are largest for economically disadvantaged students, who experience 0.5 to 1 percentage point increase in attendance rates and a 2 to 4 percentage point decrease in the probability of being chronically absent. These results are compelling evidence that school-provided transportation increases attendance for students most at-risk to miss school. However, I find no effect of school transportation on student achievement outcomes. Given the high costs of school transportation, targeting additional transportation services to chronically absent students as an attendance intervention may be more efficient than increasing bus services for all students.
Patterns, Determinants, and Consequences of Ability Tracking: Evidence from Texas Public Schools
Kate Antonovics et al.
NBER Working Paper, August 2022
Abstract:
Schools often track students to classes based on ability. Proponents of tracking argue it is a low-cost tool to improve learning since instruction is more effective when students are more homogeneous, while opponents argue it exacerbates initial differences in opportunities without strong evidence of efficacy. In fact, little is known about the pervasiveness or determinants of ability tracking in the US. To fill this gap, we use detailed administrative data from Texas to estimate the extent of tracking within schools for grades 4 through 8 over the years 2011-2019. We find substantial tracking; tracking within schools overwhelms any sorting by ability that takes place across schools. The most important determinant of tracking is heterogeneity in student ability, and schools operationalize tracking through the classification of students into categories such as gifted and disabled and curricular differentiation. When we examine how tracking changes in response to educational policies, we see that schools decrease tracking in response to accountability pressures. Finally, when we explore how exposure to tracking correlates with student mobility in the achievement distribution, we find positive effects on high-achieving students with no negative effects on low-achieving students, suggesting that tracking may increase inequality by raising the ceiling.