Marginal Returns to Public Universities

64 Pages Posted: 28 Mar 2024 Last revised: 8 Apr 2024

See all articles by Jack Mountjoy

Jack Mountjoy

University of Chicago - Booth School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: March 27, 2024

Abstract

This paper studies the causal impacts of public universities on the outcomes of their marginally admitted students. I use administrative admission records spanning all 35 public universities in Texas, which collectively enroll 10 percent of American public university students, to systemati-cally identify and employ decentralized cutoffs in SAT/ACT scores that generate discontinuities in admission and enrollment. The typical marginally admitted student completes an additional year of education in the four-year sector, is 12 percentage points more likely to earn a bachelor’s degree, and eventually earns 5-10 percent more than their marginally rejected but otherwise identical counterpart. Marginally admitted students pay no additional tuition costs thanks to offsetting grant aid; cost-benefit calculations show internal rates of return of 19-23 percent for the marginal students themselves, 10-12 percent for society (which must pay for the additional education), and 3-4 percent for the government budget. Finally, I develop a method to disentan-gle separate effects for students on the extensive margin of the four-year sector versus those who would fall back to another four-year school if rejected. Substantially larger extensive margin effects drive the results.

Suggested Citation

Mountjoy, Jack, Marginal Returns to Public Universities (March 27, 2024). University of Chicago, Becker Friedman Institute for Economics Working Paper No. 2024-35, Chicago Booth Research Paper No. #24-07, Available at SSRN: https://ssrn.com/abstract=4775183 or http://dx.doi.org/10.2139/ssrn.4775183

Jack Mountjoy (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
27
Abstract Views
110
PlumX Metrics