Monday, 27 March, 2023 | 14:00 | Applied Micro Research Seminar

Daniel Kreisman (Georgia State University) "Tuition, Graduation, Debt and Earnings: Learning from Small Shocks and Big Data"

Prof. Daniel Kreisman

Georgia State University,United States

Join online: (Passcode: 4976)

Authors: Daniel Kreisman, Jonathan Smith

Abstract: We address two questions: (1) Does the cost of college affect graduation; and (2) What is the effect of graduating on earnings? The challenge is that tuition prices are endogenous to school quality and other factors related to both graduation and earnings. To circumvent this, we exploit the fact that public universities in the U.S. have different tuition schedules for in-state and out-of-state students. Importantly, tuition changes from one year to the next vary widely for in-state and out-of-state students. Hence, we can compare across students who enrolled in the same college in the same year who experienced differential tuition shocks while enrolled. This allows us to isolate the effect of tuition on persistence and graduation, and to use these relative tuition shocks as instruments for graduation to estimate the effect of degrees on earnings. We estimate these relationships using data on over 2.5m students in four-year public universities in the U.S. linked to a credit panel which provides estimates of both debt and earnings.