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Crowded Colleges and College Crowd-Out: The Impact of Public Subsidies on the Two-Year College Market

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  • Stephanie Riegg Cellini

Abstract

This study assesses the impact of an increase in funding for public community colleges on the market for two-year college education, considering both the effect on community college enrollments and on the number of proprietary schools in a market. I draw on a new administrative dataset of for-profit colleges in California and votes on local community college bond referenda to implement a unique regression discontinuity design. The results suggest that bond passage diverts students from the private to the public sector and causes a corresponding decline in the number of proprietary schools in the market. (JEL H75, I22, I23)

Suggested Citation

  • 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, vol. 1(2), pages 1-30, August.
  • Handle: RePEc:aea:aejpol:v:1:y:2009:i:2:p:1-30
    Note: DOI: 10.1257/pol.1.2.1
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    References listed on IDEAS

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    Cited by:

    1. Bassok, Daphna & Fitzpatrick, Maria & Loeb, Susanna, 2014. "Does state preschool crowd-out private provision? The impact of universal preschool on the childcare sector in Oklahoma and Georgia," Journal of Urban Economics, Elsevier, vol. 83(C), pages 18-33.
    2. Stephanie R. Cellini & Rajeev Darolia & Lesley J. Turner, 2016. "Where Do Students Go when For-Profit Colleges Lose Federal Aid?," NBER Working Papers 22967, National Bureau of Economic Research, Inc.
    3. Sarah R. Cohodes & Joshua S. Goodman, 2014. "Merit Aid, College Quality, and College Completion: Massachusetts' Adams Scholarship as an In-Kind Subsidy," American Economic Journal: Applied Economics, American Economic Association, vol. 6(4), pages 251-285, October.
    4. Francisco Perez-Arce, 2015. "Is a Dream Deferred a Dream Denied? College Enrollment and Time-Varying Opportunity Costs," Journal of Labor Economics, University of Chicago Press, vol. 33(1), pages 33-61.
    5. Brunner, Eric J. & Johnson, Erik B., 2016. "Intergenerational conflict and the political economy of higher education funding," Journal of Urban Economics, Elsevier, vol. 91(C), pages 73-87.
    6. David J. Deming & Claudia Goldin & Lawrence F. Katz, 2012. "The For-Profit Postsecondary School Sector: Nimble Critters or Agile Predators?," Journal of Economic Perspectives, American Economic Association, vol. 26(1), pages 139-164, Winter.
    7. Cellini, Stephanie Riegg, 2012. "For-Profit Higher Education: An Assessment of Costs and Benefits," National Tax Journal, National Tax Association;National Tax Journal, vol. 65(1), pages 153-179, March.
    8. Chung, Anna, 2008. "The Choice of For-Profit College," MPRA Paper 18971, University Library of Munich, Germany, revised Nov 2009.
    9. Andrea Park Chung & Martin Gaynor & Seth Richards-Shubik, 2017. "Subsidies and Structure: The Lasting Impact of the Hill-Burton Program on the Hospital Industry," The Review of Economics and Statistics, MIT Press, vol. 99(5), pages 926-943, December.
    10. Arbel, Yuval & Bar-El, Ronen & Tobol, Yossi, 2017. "Equal Opportunity through Higher Education: Theory and Evidence on Privilege and Ability," IZA Discussion Papers 10564, Institute for the Study of Labor (IZA).
    11. Adam Looney & Constantine Yannelis, 2015. "A Crisis in Student Loans? How Changes in the Characteristics of Borrowers and in the Institutions They Attended Contributed to Rising Loan Defaults," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 46(2 (Fall)), pages 1-89.
    12. Stephanie Riegg Cellini & Claudia Goldin, 2014. "Does Federal Student Aid Raise Tuition? New Evidence on For-Profit Colleges," American Economic Journal: Economic Policy, American Economic Association, vol. 6(4), pages 174-206, November.
    13. Jacqmin, Julien, 2014. "The Emergence of For-Profit Higher Education Institutions," MPRA Paper 59299, University Library of Munich, Germany.
    14. David J. Deming & Christopher R. Walters, 2017. "The Impact of Price Caps and Spending Cuts on U.S. Postsecondary Attainment," NBER Working Papers 23736, National Bureau of Economic Research, Inc.
    15. Cellini, Stephanie Riegg & Chaudhary, Latika, 2014. "The labor market returns to a for-profit college education," Economics of Education Review, Elsevier, vol. 43(C), pages 125-140.
    16. Gilpin, Gregory A. & Saunders, Joseph & Stoddard, Christiana, 2015. "Why has for-profit colleges’ share of higher education expanded so rapidly? Estimating the responsiveness to labor market changes," Economics of Education Review, Elsevier, vol. 45(C), pages 53-63.
    17. Stephanie Riegg Cellini & Nicholas Turner, 2016. "Gainfully Employed? Assessing the Employment and Earnings of For-Profit College Students Using Administrative Data," NBER Working Papers 22287, National Bureau of Economic Research, Inc.
    18. Chung, Anna S., 2012. "Choice of for-profit college," Economics of Education Review, Elsevier, vol. 31(6), pages 1084-1101.
    19. Turner, Nicholas, 2012. "Who benefits from student aid? The economic incidence of tax-based federal student aid," Economics of Education Review, Elsevier, vol. 31(4), pages 463-481.

    More about this item

    JEL classification:

    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions

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    1. Crowded Colleges and College Crowd-Out: The Impact of Public Subsidies on the Two-Year College Market (AEJ:EP 2009) in ReplicationWiki

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