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Liquidity Affects Job Choice: Evidence from Teach for America

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  • Lucas C Coffman
  • John J Conlon
  • Clayton R Featherstone
  • Judd B Kessler

Abstract

Can access to a few hundred dollars of liquidity affect the career choice of a recent college graduate? In a three-year field experiment with Teach For America (TFA), a prestigious teacher placement program, we randomly increase the financial packages offered to nearly 7,300 potential teachers who requested support for the transition into teaching. The first two years of the experiment reveal that although most applicants do not respond to a marginal $600 of grants or loans, those in the worst financial position respond by joining TFA at higher rates. We continue the experiment into the third year and self-replicate our results. For the highest-need applicants, an extra $600 in loans, $600 in grants, and $1,200 in grants increase the likelihood of joining TFA by 12.2, 11.4, and 17.1 percentage points (or 20.0%, 18.7%, and 28.1%), respectively. Additional grant and loan dollars are equally effective, suggesting a liquidity mechanism. A follow-up survey bolsters the liquidity story and also shows that those drawn into teaching would have otherwise worked in private-sector firms.

Suggested Citation

  • Lucas C Coffman & John J Conlon & Clayton R Featherstone & Judd B Kessler, 2019. "Liquidity Affects Job Choice: Evidence from Teach for America," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 134(4), pages 2203-2236.
    • Handle: RePEc:oup:qjecon:v:134:y:2019:i:4:p:2203-2236.
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    File URL: http://hdl.handle.net/10.1093/qje/qjz018
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    Cited by:

    1. Jaime Arellano-Bover, 2022. "The Effect of Labor Market Conditions at Entry on Workers' Long-Term Skills," The Review of Economics and Statistics, MIT Press, vol. 104(5), pages 1028-1045, December.
    2. Arellano-Bover, Jaime & Saltiel, Fernando, 2021. "Differences in On-the-Job Learning across Firms," IZA Discussion Papers 14473, Institute of Labor Economics (IZA).
    3. B. Kelsey Jack & Seema Jayachandran & Namrata Kala & Rohini Pande, 2022. "Money (Not) to Burn: Payments for Ecosystem Services to Reduce Crop Residue Burning," NBER Working Papers 30690, National Bureau of Economic Research, Inc.
    4. Christopher Neilson & Sebastian Gallegos & Franco Calle, 2019. "Screening and Recruiting Talent At Teacher Colleges Using Pre-College Academic Achievement," Working Papers 636, Princeton University, Department of Economics, Industrial Relations Section..

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