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The Returns to College(s): Estimating Value-Added and Match Effects in Higher Education

Author

Listed:
  • Jack Mountjoy

    (University of Chicago - Booth School of Business)

  • Brent Hickman

    (Washington University in St. Louis - John M. Olin Business School)

Abstract
Students who attend different colleges in the United States end up with vastly different educational and labor market outcomes. We estimate value-added of individual postsecondary institutions to disentangle causal impacts of colleges from student sorting in producing these disparate outcomes. Linking administrative registries of high school records, college applications, admissions decisions, enrollment spells, degree completions, and quarterly earnings spanning the Texas population, we identify college value-added across the diverse distribution of thirty Texas public universities by comparing the outcomes of students who apply to and are admitted by the same set of institutions, as this approach strikingly balances student ability measures across college treatments and delivers value-added estimates impervious to additional controls. We find that differences in causal value-added play a much smaller role, relative to student sorting, in producing observed outcome differences across colleges. The distribution of value-added is not degenerate, however, and while it has little relationship with selectivity, we find that non-peer college inputs like instructional spending and the faculty-student ratio do covary positively with value-added, especially conditional on selectivity. Examining potential mechanisms, colleges that ultimately boost earnings also tend to boost persistence, BA completion, and STEM degrees along the way. Finally, we probe the potential for (mis)match effects by allowing value-added to vary flexibly by student characteristics, including race, gender, family income, and pre-college measures of cognitive and non-cognitive skills. At first glance, black students appear to face small negative returns to attending more selective colleges, but this pattern of modest “mismatch†is driven by two large historically black universities in Texas that have low selectivity but above-average value-added. Across the non-HBCUs, black students face similar returns to selectivity as their peers from other backgrounds.

Suggested Citation

  • Jack Mountjoy & Brent Hickman, 2020. "The Returns to College(s): Estimating Value-Added and Match Effects in Higher Education," Working Papers 2020-08, Becker Friedman Institute for Research In Economics.
    • Handle: RePEc:bfi:wpaper:2020-08
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    File URL: https://repec.bfi.uchicago.edu/RePEc/pdfs/BFI_WP_202008.pdf
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    2. Joshua Angrist & Peter Hull & Parag A. Pathak & Christopher R. Walters, 2020. "Simple and Credible Value-Added Estimation Using Centralized School Assignment," NBER Working Papers 28241, National Bureau of Economic Research, Inc.
    3. Sandra E. Black & Jeffrey T. Denning & Jesse Rothstein, 2023. "Winners and Losers? The Effect of Gaining and Losing Access to Selective Colleges on Education and Labor Market Outcomes," American Economic Journal: Applied Economics, American Economic Association, vol. 15(1), pages 26-67, January.
    4. Mitra Akhtari & Natalie Bau & Jean-William Laliberté, 2024. "Affirmative Action and Precollege Human Capital," American Economic Journal: Applied Economics, American Economic Association, vol. 16(1), pages 1-32, January.
    5. Barbara Biasi & Song Ma, 2022. "The Education-Innovation Gap," CESifo Working Paper Series 9653, CESifo.
    6. Gandil, Mikkel Høst, 2021. "Substitution Effects in College Admissions," Memorandum 3/2021, Oslo University, Department of Economics.
    7. Sara Goldrick‐Rab & Marshall Steinbaum, 2020. "Effective Treatment For The Student Debt Crisis Requires An Accurate Diagnosis," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 39(2), pages 548-550, March.
    8. Esteban M. Aucejo & Claudia Hupkau & Jenifer Ruiz-Valenzuela, 2020. "Where versus What: College Value-Added and Returns to Field of Study in Further Education," CVER Research Papers 030, Centre for Vocational Education Research.
    9. Zachary Bleemer, 2022. "Affirmative Action, Mismatch, and Economic Mobility after California’s Proposition 209," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 137(1), pages 115-160.
    10. Vikram Krishnaveti & Saannidhya Rawat, 2024. "GPT takes the SAT: Tracing changes in Test Difficulty and Math Performance of Students," Papers 2409.10750, arXiv.org.
    11. Britton, Jack & van der Erve, Laura & Belfield, Chris & Vignoles, Anna & Dickson, Matt & Zhu, Yu & Walker, Ian & Dearden, Lorraine & Sibieta, Luke & Buscha, Franz, 2022. "How much does degree choice matter?," Labour Economics, Elsevier, vol. 79(C).
    12. Adam Looney & Constantine Yannelis, 2020. "How To Fix Federal Student Loan Programs," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 39(2), pages 540-547, March.
    13. Costas-Fernández, Julián & Morando, Greta & Holford, Angus, 2023. "The effect of foreign students in higher education on native students’ outcomes," European Economic Review, Elsevier, vol. 160(C).
    14. Machado, Cecilia & Reyes, Germán & Riehl, Evan, 2022. "Alumni Job Networks at Elite Universities and the Efficacy of Affirmative Action," IZA Discussion Papers 15026, Institute of Labor Economics (IZA).
    15. Cecilia Machado & Germán Reyes & Evan Riehl, 2023. "The Efficacy of Large-Scale Affirmative Action at Elite Universities," CEDLAS, Working Papers 0311, CEDLAS, Universidad Nacional de La Plata.
    16. Cecilia Machado & Germ'an Reyes & Evan Riehl, 2023. "The Direct and Spillover Effects of Large-scale Affirmative Action at an Elite Brazilian University," Papers 2305.02513, arXiv.org, revised Jun 2023.
    17. Naven, Matthew & Whalen, Daniel, 2022. "The signaling value of university rankings: Evidence from top 14 law schools," Economics of Education Review, Elsevier, vol. 89(C).
    18. Bleemer , Zachary & Mehta, Aashish, 2021. "College Major Restrictions and Student Stratification," University of California at Berkeley, Center for Studies in Higher Education qt513249vg, Center for Studies in Higher Education, UC Berkeley.

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