The effect of college acquisitions and mergers on student dropout behaviour: evidence from the UK

We investigate the effect of college acquisitions on the probability of students dropping out of college. Using administrative data for the further education (FE) sector, which covers multiple cohorts, we estimate matching models and combine them with difference-in-differences methods to remove the effects of unobserved student and college heterogeneity. Overall our findings show that acquisitions reduce the probability of dropout by 0.01 percentage points, but this varies in magnitude and direction over time. In general, positive effects of acquisitions on drop out behaviour tend to be small (e.g. 0.001 for acquisitions in 2004) and dissipate over time, whereas negative effects persist and tend to increase in magnitude over time (e.g. −0.05 one year later and −0.07 two years later). We discuss the implications for policy and practice in the sector, as well as suggesting a need for similar analyses in other education sectors, such as primary and secondary schooling.