Complementarities in High School and College Investments

137 Pages Posted: 13 Sep 2023 Last revised: 18 Oct 2023

See all articles by John Eric Humphries

John Eric Humphries

Yale University - Department of Economics

Juanna Schrøter Joensen

University of Chicago; Aarhus University; Institute for the Study of Labor (IZA)

Gregory F. Veramendi

Royal Holloway, University of London

Date Written: August 31, 2023

Abstract

How do pre-college investments affect college enrollment, graduation, and labor market outcomes? Using Swedish registry data, we document how students sort on multidimensional abilities into high school tracks, and sort on both abilities and high school track into college majors. These sorting patterns highlight the presence of dynamic selection on both the level and type of education, and suggest that there may be dynamic complementarities between secondary and post-secondary investments. With the goal of estimating dynamic complementarities, we develop a dynamic Roy model to account for selection and differential returns to abilities, prior investments, and other persistent unobservables. We identify the model using noisy measures of abilities combined with quasi-experimental variation at the high school and college application stages. We find heterogeneous returns to abilities by final education, and economically important dynamic complementarities between high school and college investments. Consequently, we find larger returns to counterfactual policies promoting investments in STEM skills in high school compared to in college.

Keywords: Cognitive and Non-cognitive Abilities, Education Investment, High School Curriculum, College Major Choice

JEL Classification: C32, C38, I21, J24, J31

Suggested Citation

Humphries, John Eric and Joensen, Juanna Schrøter and Veramendi, Gregory F., Complementarities in High School and College Investments (August 31, 2023). Available at SSRN: https://ssrn.com/abstract=4560152 or http://dx.doi.org/10.2139/ssrn.4560152

John Eric Humphries

Yale University - Department of Economics ( email )

28 Hillhouse Ave
New Haven, CT 06520-8268
United States

HOME PAGE: http://www.johnerichumphries.com

Juanna Schrøter Joensen

University of Chicago ( email )

1101 East 58th Street
Chicago, IL 60637
United States

Aarhus University ( email )

Nordre Ringgade 1
DK-8000 Aarhus C, 8000
Denmark

Institute for the Study of Labor (IZA) ( email )

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

Gregory F. Veramendi (Contact Author)

Royal Holloway, University of London ( email )

Department of Economics
Egham Hill
Egham, TW20 0EX
United Kingdom

HOME PAGE: http://gregveramendi.github.io

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