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We estimate the effects on postsecondary education outcomes of the Kalamazoo Promise, a generous, place-based college scholarship. We identify Promise effects using two forms of difference-in-differences: (i) comparing eligible to ineligible graduates before and after the Promise's initiation and (ii) comparing the treated district to comparison districts before and after the Promise's initiation. According to our estimates, the Promise increases college enrollment and credential attainment. Stronger effects occur for women. The results also provide suggestive but less precise evidence that Promise effects extend to disadvantaged groups. [End Page 269] [ABSTRACT FROM AUTHOR]

We show that skill requirements in job vacancy postings differentially increased in MSAs that were hit hard by the Great Recession, relative to less hard-hit areas. These increases persist through at least the end of 2015 and are correlated with increases in capital investments, both at the MSA and firm levels. We also find that effects are most pronounced in routine-cognitive occupations, which exhibit relative wage growth as well. We argue that this evidence is consistent with the restructuring of production toward routine-biased technologies and the more-skilled workers that complement them, and that the Great Recession accelerated this process. (JEL E24, E32, J24, J31, J63, L23, O33)

As higher education costs rise, many communities have begun to adopt their own financial aid strategy: place-based scholarships for students graduating from the local school district. In this paper, we examine the benefits and costs of the Kalamazoo Promise, one of the more universal and more generous place-based scholarships. Building upon estimates of the program’s heterogeneous effects on degree attainment, scholarship cost data, and projections of future earnings by education, we examine the Promise’s benefit-cost ratios for students differentiated by income, race, and gender. Although the average rate of return of the program is 11%, rates of return vary greatly by group. The Promise has high returns for both low-income and non-low-income groups, for non-Whites, and for women, while benefit assumptions matter more for Whites and men. Our results show that universal scholarships can reach many students and have a high rate of return, particularly for places with a high percentage of African American students. They also highlight the importance of disaggregating benefits and costs by subgroup when performing benefit-cost analysis when the treatment is heterogeneous.

While previous research has documented how the Kalamazoo Promise, the most prominent and generous place-based college scholarship program, increased enrollment in Kalamazoo Public Schools, this paper qualifies and quantifies the characteristics of students who were induced to enter—or stay—in the district. In particular, it analyzes the origins and destinations, socioeconomic composition, and school-level sorting behavior associated with student flows around the time of the Promise announcement. These dimensions are more subtle than changes in the volume of students or measures of their individual success, but they are equally important to understand for communities exploring the feasibility of place-based scholarships as a local economic development tool. The findings suggest considerable economic benefits not just for the school district but for the broader metropolitan area. JEL Classification Codes: I21, I25, J61, O18, R10

This paper explores how high school graduate men and women vary in their behavioral responses to beginning labor market entry during a recession. In contrast with previous related literature that found a substantial negative wage impact but minimal employment impact in samples of highly educated men, the empirical evidence presented here suggests a different outcome for the less well educated, and between the sexes. Women, but not men, who graduate high school in an adverse labor market are less likely to be in the workforce for the next four years, but longer-term effects are minimal. Further, while men increase their enrollment as a short-run response to weak labor demand, women do not; instead, they appear temporarily to substitute into home production. Women's wages are less affected than men's, and both groups' wages are less affected than the college graduates previously studied.

During the last several decades, it has become increasingly difficult to gain entry into an American four-year college or university. Growing numbers of students compete for admission to such schools: the number of college applicants has doubled since the early 1970s, while school sizes have changed little. This increase is due both to the increasing fraction of high school graduates applying for college and more recently to the increase in the size of the college-aged cohorts. Using data from the Digest of Education Statistics (Snyder, Dillow, and Hoffman, 2009) and various National Center for Education Statistics (NCES) surveys, we summarize these trends in Table 1. The table shows that while the application rate to four-year colleges has steadily increased over the last several decades, the decline in cohort size between 1982 and 1992 left the number of applicants practically unchanged between the two years. From 1992 to 2004, on the other hand, the number of applicants to four-year colleges grew from 1.19 million to 1.71 million students, an increase of 44 percent, as rising application rates and growing cohort size reinforced each other. The pattern was slightly different for selective private and public colleges, which saw the number of applicants rise by 10 to 15 percent over the 1980s despite declining cohort size. While the application rate to selective privates dipped slightly between 1992 and 2004, the number of applicants still grew by 30,000, or 18 percent, due to growing cohort size. Table 1 Supply and Demand Trends in College-Going (thousands) In the face of growing demand, the supply of admission slots at four-year colleges did not keep pace. According to our calculations using data from the Annual Survey of Colleges, a near-census of four-year postsecondary institutions in the United States conducted by the College Board, the top 20 private universities and top 20 liberal arts colleges saw only a 0.7 percent change in average under-graduate enrollment from 1986 to 2003. Those ranked 21 to 50 also experienced relatively little growth (4.9 percent and 6.8 percent at private universities and liberal arts colleges, respectively). In contrast, other private four-year institutions grew nearly 16 percent during the period. Public institutions showed more expansion during this period with enrollments increasing 15.2 percent at the top 20 public universities, 10.5 percent at public universities ranked 21 to 47, and 12.8 percent at other public institutions. This increase in enrollment at the most selective public institutions appears largely driven by transfer students, many assumed to be from public two-year colleges. However, when focusing on the sizes of the incoming freshmen classes, the change in enrollment at public institutions has been much smaller. Because fewer than 500,000 slots were added in total at four-year schools from 1992 to 2004, supply did not keep pace with demand, and college selectivity increased. High school seniors today are subject to more competition than at any time in the recent past. The increased overall demand for a college education, presumably, can largely be explained by the dramatic increases in the value of such an education since the 1970s (Heckman, Lochner, and Todd, 2006; Goldin and Katz, 2008). The increased demand for admission to selective schools in particular is plausibly related to the fact that the particular institution a student attends has become increasingly important. Since 1970, income distribution has widened among college-educated workers, and Hoxby and Long (1999) find that nearly half of the explained growth in this dispersion is due to the increasing concentration of peer and financial resources at more selective colleges and universities relative to other institutions. Other work has also documented this increasing segmentation within higher education (Hoxby, 1997, this issue; Bound, Lovenheim, and Turner, 2008). The spread of information through the advent of the U.S. News and World Report and other rankings systems have also given students, their families, and society more data with which to evaluate college quality. As emphasized by Hoxby in this issue, the college market has shifted from regional in focus to national. Also, as more workers are college educated, employers may view the average college-educated worker as less productive than in the past. Under this signaling type of framework, a degree from an elite college becomes more valuable. All of these factors likely play a role in increasing the number of high school graduates who consider elite colleges. This paper begins by documenting the trends of increasing competition in higher education, including how these increases have varied across groups, from the perspective of both institutions and students. It then explores the ways in which this phenomenon has influenced student behavior, in terms of academic preparation and high school activities, standardized test-taking, and college application behavior. Evidence from multiple sources suggests that a significant fraction of students are increasingly searching for ways to maximize their likelihood of admittance into a selective institution. As theory would predict, students have been driven to invest more in signals of ability and to raise their qualifications with the hope of increasing their chances of gaining entry into a selective institution. It has also driven students to alter their approaches to the college application. The extent of student reactions has differed along the ability distribution and by region, as the returns to such investments and changes in application approaches also vary by student. Finally, the paper explores whether such student reactions to growing competition have translated into longer-term effects on the amount that students learn. From a theoretical point of view, the increased competition could have induced high school students to work harder and learn more or, alternatively, could have lead to the reverse by prompting investments in nonproductive signals. Credible evidence on the net effect of increased competition is, needless to say, difficult to find. However, comparisons across regions of the country where competition is more versus less severe provides little evidence that increased competition has had positive effects on what students learn and even provides some suggestive evidence that the reverse might be true.