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Author: Best, Katharina
Resulting in 2 citations.
1. Best, Katharina
Three Studies on the Value and Risk of Higher Education
Ph.D. Dissertation, University of Michigan, October 2013
Cohort(s): NLSY97
Publisher: ProQuest Dissertations & Theses (PQDT)
Keyword(s): College Education; College Major/Field of Study/Courses; Colleges; Debt/Borrowing; Educational Costs; Modeling, Logit; Student Loans; Tuition

Permission to reprint the abstract has not been received from the publisher.

We first examine US funding for and results of higher education in the context of eleven countries in Western Europe. We study differences in effect of population size, economy, and spending on new enrollment. We find GDP is a better predictor of enrollment changes than spending on higher education or population. We use the relationship between GDP and enrollment as a mechanism for studying the differences in spending effectiveness between countries. We find that European reforms, such as increased school autonomy and student loans/grants, cause no differences in enrollment. Enrollment is higher in countries where proportionately more educational funding comes from private sources.

We further focus on the US higher education market. Using a two-stage least squares model, we build a macroeconomic model of supply and demand for US higher education as measured by enrollment. We find that college education benefits (e.g. relative earnings and employment levels), credit factors (e.g. student loan amounts and household debt), and financial aid shift demand. Higher tuition prices increase appeal of higher education but credit constraints put a barrier on demand growth. Tuition prices and debt levels are correlated, suggesting that students respond to higher tuition prices by borrowing. School's operating costs, government aid, and tuition and non-tuition revenue drive supply. Schools can use tuition prices to signal quality, and relative demand side price in-elasticity allows them to raise prices.

Finally, we narrow in on individuals. We compare post-college income across differing groups of student ability, school quality, and major choice. We condition on intrinsic student ability based on the quality of the top school to which a student was admitted. We find that attendance at an elite institution increases post-college income. For students not admitted to an elite school, income is primarily driven by student ability and major choice. Students majoring in engineering and business earn higher salaries than students focusing on humanities and arts even after adjusting for ability. School quality plays a key role in the college attendance and school choice decisions, even though we do not find a significant effect of these decisions on post-college earnings in most cases.

Bibliography Citation
Best, Katharina. Three Studies on the Value and Risk of Higher Education. Ph.D. Dissertation, University of Michigan, October 2013.
2. Best, Katharina
Keppo, Jussi
A Major Choice: An Examination of Higher Education and Ability-Adjusted Income
Working Paper, Social Science Research Network, January 2014
Cohort(s): NLSY97
Publisher: Social Science Electronic Publishing, Inc.
Keyword(s): College Characteristics; College Major/Field of Study/Courses; Higher Education; Income; School Quality

Permission to reprint the abstract has not been received from the publisher.

We compare annual post-college income across student groups defined by ability levels, school quality, and major using individual-level data from the NLSY 1997. We condition on student ability (quality of the top school admitted to), and study major and school choice together. Elite institution attendance increases post-college income by almost $8,000. Some of this increase is driven by longer working hours. Major choice has a bigger impact on income than school choice. Students majoring in engineering, computer-related fields, and business earn more than humanities and arts majors even after adjusting for ability and hours worked ($23,000 more for top students).
Bibliography Citation
Best, Katharina and Jussi Keppo. "A Major Choice: An Examination of Higher Education and Ability-Adjusted Income." Working Paper, Social Science Research Network, January 2014.