College Choice, Private Options, and The Incidence of Public Investment in Higher Education / John Bound, Andrew Simon.

Format:

Book

Author/Creator:

Bound, John.

Contributor:

National Bureau of Economic Research.

Simon, Andrew.

Series:

Working Paper Series (National Bureau of Economic Research) no. w29353.

NBER working paper series no. w29353

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2021.

Summary:

Previous measures of the incidence of public investment in higher education focus on the transfer to public college students. This implies that the net benefits to students who do not attend public colleges is negative. However, they miss potential general equilibrium effects on the private college and labor markets. Changes in the public college market affect who private colleges admit, what prices they charge, and the number of students who enroll in any college. We show that capturing these spillovers is important for characterizing incidence using a model of higher education that we validate with quasi-experimental variation in state spending. Unlike previous measures, we find that high-income-modest-ability students especially benefit since they are only admitted to high-quality private colleges when state spending is high, and the public colleges create sufficient competitive pressure. Decreased investment also reduces educational attainment, raising the college wage premium. This exacerbates private college market power.

Notes:

Print version record

October 2021.