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The Choice of For-Profit College

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  • Chung, Anna

Abstract

In this paper I investigate whether students self-select into the US for-profit colleges or whether the choice of for-profit sector is accidental or due to the reasons external to the students (geographic exposure to for-profit providers, tuition pricing, or random circumstances). The main student-level data samples come from the National Education Longitudinal Study of 1988 (NELS:88) and the associated Postsecondary Education Transcript Study (PETS:2000). I estimate a multinomial logit of college choice where student's choice set is defined across four alternatives: no college, a for-profit college, a non-profit 2-year (or less-than-2-year) college, and a non-selective non-profit 4-year college. I find that students self-select into for-profit sector. Three groups of significant factors stand out. First, choice of for-profit sector is characterized by lower parental involvement in student's schooling. Second, ceteris paribus, for-profit-bound students are more likely to display high levels of school absenteeism and to give birth as early as 10th grade. Third, the average predicted probabilities of choosing for-profit sector increase as in-state public community college tuition rises and county-specific concentration of for-profit providers grows larger.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 18971.

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Date of creation: Dec 2008
Date of revision: Nov 2009
Handle: RePEc:pra:mprapa:18971

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Related research

Keywords: for-profit; private; education; college; choice; vocational; workforce; training;

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References

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  1. Farley Ordovensky, J., 1995. "Effects of institutional attributes on enrollment choice: Implications for postsecondary vocational education," Economics of Education Review, Elsevier, Elsevier, vol. 14(4), pages 335-350, December.
  2. Siegfried, John & Getz, Malcolm, 2006. "Where do the children of professors attend college?," Economics of Education Review, Elsevier, Elsevier, vol. 25(2), pages 201-210, April.
  3. DesJardins, Stephen L. & Dundar, Halil & Hendel, Darwin D., 1999. "Modeling the College Application Decision Process in a Land-Grant University," Economics of Education Review, Elsevier, Elsevier, vol. 18(1), pages 117-132, February.
  4. Dan A. Black & Jeffrey A. Smith, 2006. "Estimating the Returns to College Quality with Multiple Proxies for Quality," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 24(3), pages 701-728, July.
  5. Cawley, John & Heckman, James & Vytlacil, Edward, 2001. "Three observations on wages and measured cognitive ability," Labour Economics, Elsevier, Elsevier, vol. 8(4), pages 419-442, September.
  6. Eide, Eric & Brewer, Dominic J. & Ehrenberg, Ronald G., 1998. "Does it pay to attend an elite private college? Evidence on the effects of undergraduate college quality on graduate school attendance," Economics of Education Review, Elsevier, Elsevier, vol. 17(4), pages 371-376, October.
  7. Chung, Anna, 2008. "For-Profit Student Heterogeneity," MPRA Paper 18967, University Library of Munich, Germany, revised Nov 2009.
  8. Eric P. Bettinger & Bridget Terry Long & Philip Oreopoulos & Lisa Sanbonmatsu, 2009. "The Role of Simplification and Information in College Decisions: Results from the H&R Block FAFSA Experiment," NBER Working Papers 15361, National Bureau of Economic Research, Inc.
  9. Michael S. McPherson & Morton Owen Schapiro & Lori G. Kletzer & Jere R. Behrman, 1992. "The College Investment Decision: Direct and Indirect Effects of Family Background on Choice of Postsecondary Enrollment and Quality," Williams Project on the Economics of Higher Education, Department of Economics, Williams College DP-18, Department of Economics, Williams College.
  10. Lockwood Reynolds, C., 2012. "Where to attend? Estimating the effects of beginning college at a two-year institution," Economics of Education Review, Elsevier, Elsevier, vol. 31(4), pages 345-362.
  11. Dynarski, Susan M. & Scott–Clayton, Judith E., 2006. "The Cost of Complexity in Federal Student Aid: Lessons from Optimal Tax Theory and Behavioral Economics," National Tax Journal, National Tax Association, vol. 59(2), pages 319-56, June.
  12. Cho, Donghun, 2007. "The role of high school performance in explaining women's rising college enrollment," Economics of Education Review, Elsevier, Elsevier, vol. 26(4), pages 450-462, August.
  13. Kuhn, Peter & Weinberger, Catherine, 2003. "Leadership Skills and Wages," University of California at Santa Barbara, Economics Working Paper Series qt50q3c9n1, Department of Economics, UC Santa Barbara.
  14. Jacob, Brian A., 2002. "Where the boys aren't: non-cognitive skills, returns to school and the gender gap in higher education," Economics of Education Review, Elsevier, Elsevier, vol. 21(6), pages 589-598, December.
  15. Dynarski, Susan & Scott-Clayton, Judith, 2006. "The Cost of Complexity in Federal Student Aid: Lessons from Optimal Tax Theory and Behavioral Economics," Working Paper Series, Harvard University, John F. Kennedy School of Government rwp06-013, Harvard University, John F. Kennedy School of Government.
  16. Stephanie Riegg Cellini, 2009. "Crowded Colleges and College Crowd-Out: The Impact of Public Subsidies on the Two-Year College Market," American Economic Journal: Economic Policy, American Economic Association, American Economic Association, vol. 1(2), pages 1-30, August.
  17. Toutkoushian, Robert K., 2001. "Do parental income and educational attainment affect the initial choices of New Hampshire's college-bound students?," Economics of Education Review, Elsevier, Elsevier, vol. 20(3), pages 245-262, June.
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Cited by:
  1. Chung, Anna, 2008. "For-Profit Student Heterogeneity," MPRA Paper 18967, University Library of Munich, Germany, revised Nov 2009.
  2. Chung, Anna, 2008. "The Effects of For-Profit College Training on Earnings," MPRA Paper 18972, University Library of Munich, Germany, revised May 2009.

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