Do Expenditures Other than Instructional Expenditures Affect Graduation and Persistence Rates in American Higher Education?

33 Pages Posted: 18 Aug 2009

See all articles by Douglas A. Webber

Douglas A. Webber

Temple University - Department of Economics

Ronald G. Ehrenberg

ILR-Cornell University; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Abstract

Median instructional spending per full-time equivalent (FTE) student at American colleges and universities has grown at a slower rate the median spending per FTE in a number of other expenditure categories during the last two decades. We use institutional level panel data and a variety of econometric approaches, including unconditional quantile regression models, to analyze whether noninstructional expenditure categories influence first year persistence and graduation rates of American undergraduate students. Our most important finding is that student service expenditures influence graduation and persistence rates and their marginal effects are larger for students at institutions with lower entrance test scores and more lower income students. Put another way, their effects are largest at institutions that have lower current persistence and graduation rates. Simulations suggest that reallocating some funding from instruction to student services may enhance persistence and graduation rates at those institutions whose rates are currently below the medians in the sample.

Keywords: higher education, productivity, graduation rates

JEL Classification: I2

Suggested Citation

Webber, Douglas A. and Ehrenberg, Ronald G., Do Expenditures Other than Instructional Expenditures Affect Graduation and Persistence Rates in American Higher Education?. IZA Discussion Paper No. 4345, Available at SSRN: https://ssrn.com/abstract=1455507 or http://dx.doi.org/10.2139/ssrn.1455507

Douglas A. Webber

Temple University - Department of Economics ( email )

Philadelphia, PA 19122
United States

Ronald G. Ehrenberg (Contact Author)

ILR-Cornell University ( email )

Higher Education Research Institute
Ithaca, NY 14853-3901
United States
607-255-3026 (Phone)
607-255-4496 (Fax)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

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