College Expansion and the Marginal Returns to Education: Evidence from Russia

Abstract

This paper evaluates whether the expansion of higher education is economically worthwhile based on a recent surge in the number of campuses and college graduates in Russia. Our empirical strategy relies on the marginal treatment effect method in both normal and semi‐parametric versions, and estimating policy‐influenced treatment parameters for the marginal students who are directly affected by college expansion. We use high‐quality panel data with multiple wage observations, many birth cohorts, disaggregated location information, and past economic conditions.We find that college expansion attracts individuals with lower returns to college, but the returns for marginal students vary considerably depending on the scale of expansion and the type of location where new campuses are opened. Marginal individuals in smaller cities and locations without college campuses receive the largest benefits from new campuses. The results provide important implications for the design of policies targeting the expansion of higher education.

Keywords: education, returns to college, marginal treatment effect, policy‐relevant treatment effect, local instrumental variable, selection bias, college expansion, Russia

JEL Classification: J31, I21, P36