The Labor Market Returns to a For-Profit College Education
43 Pages Posted: 18 Jul 2012
There are 2 versions of this paper
The Labor Market Returns to a For-Profit College Education
The Labor Market Returns to a For-Profit College Education
Date Written: June 17, 2012
Abstract
A lengthy literature estimating the returns to education has largely ignored the for-profit sector. In this paper, we offer some of the first causal estimates of the earnings gains to for-profit colleges. We rely on restricted-use data from the 1997 National Longitudinal Survey of Youth (NLSY97) to implement an individual fixed effects estimation strategy that allows us to control for time-invariant unobservable characteristics of students. We find that students who enroll in associate’s degree programs in for-profit colleges experience earnings gains between 6 and 8 percent, although a 95 percent confidence interval suggests a range from -2.7 to 17.6 percent. These gains cannot be shown to be different from those of students in public community colleges. Students who complete associate’s degrees in for-profit institutions earn around 22 percent, or 11 percent per year, and we find some evidence that this figure is higher than the returns experienced by public sector graduates. Our findings suggest that degree completion is an important determinant of for-profit quality and student success.
Keywords: returns to education, for-profit college, community college, NLSY, earnings
JEL Classification: I2, I20, I23, J01, J24
Suggested Citation: Suggested Citation
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