Marginal Returns to Public Universities

Jack Mountjoy

No 32296, NBER Working Papers from National Bureau of Economic Research, Inc

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 systematically 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 disentangle 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.

JEL-codes: H43 H75 I2 I20 I22 I23 I24 I26 I28 J24 J31 (search for similar items in EconPapers)
Date: 2024-04
New Economics Papers: this item is included in nep-edu, nep-lma, nep-pbe and nep-ure
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