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Building the Stock of College-Educated Labor

  • Susan Dynarski

Half of college students drop out before completing a degree. These low rates of college completion among young people should be viewed in the context of slow future growth in the educated labor force, as the well-educated baby boomers retire and new workers are drawn from populations with historically low education levels. This paper establishes a causal link between college costs and the share of workers with a college education. I exploit the introduction of two large tuition subsidy programs, finding that they increase the share of the population that completes a college degree by three percentage points. The effects are strongest among women, with white women increasing degree receipt by 3.2 percentage points and the share of nonwhite women attempting or completing any years of college increasing by six and seven percentage points, respectively. A cost-benefit analysis indicates that tuition reduction can be a socially efficient method for increasing college completion. However, even with the offer of free tuition, a large share of students continue to drop out, suggesting that the direct costs of school are not the only impediment to college completion.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 11604.

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Date of creation: Sep 2005
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Publication status: published as Susan Dynarski, 2008. "Building the Stock of College-Educated Labor," Journal of Human Resources, University of Wisconsin Press, vol. 43(3), pages 576-610.
Handle: RePEc:nbr:nberwo:11604
Note: ED LS
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  12. Dynarski, Susan, 2004. "The New Merit Aid," Working Paper Series rwp04-009, Harvard University, John F. Kennedy School of Government.
    • Susan Dynarski, 2004. "The New Merit Aid," NBER Chapters, in: College Choices: The Economics of Where to Go, When to Go, and How to Pay For It, pages 63-100 National Bureau of Economic Research, Inc.
  13. Gruber, Jon & Saez, Emmanuel, 2002. "The elasticity of taxable income: evidence and implications," Journal of Public Economics, Elsevier, vol. 84(1), pages 1-32, April.
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  15. Dynarski, Susan, 2001. "Does Aid Matter? Measuring the Effect of Student Aid on College Attendance and Completion," Working Paper Series rwp01-034, Harvard University, John F. Kennedy School of Government.
  16. Todd Stinebrickner & Ralph Stinebrickner, 2001. "Understanding Educational Outcomes of Students from Low Income Families: Evidence from a Liberal Arts College with a Full Tuition Subsidy Program," University of Western Ontario, CIBC Centre for Human Capital and Productivity Working Papers 20014, University of Western Ontario, CIBC Centre for Human Capital and Productivity.
  17. Joshua D. Angrist, 1993. "The effect of veterans' benefits on education and earnings," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 46(4), pages 637-652, July.
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  23. John Bound & Sarah Turner, 2002. "Going to War and Going to College: Did World War II and the G.I. Bill Increase Educational Attainment for Returning Veterans?," Journal of Labor Economics, University of Chicago Press, vol. 20(4), pages 784-815, October.
  24. Eric Bettinger, 2004. "How Financial Aid Affects Persistence," NBER Working Papers 10242, National Bureau of Economic Research, Inc.
  25. Dynarski, Susan, 2000. "Hope for Whom? Financial Aid for the Middle Class and Its Impact on College Attendance," National Tax Journal, National Tax Association, vol. 53(n. 3), pages 629-62, September.
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  28. Dee, Thomas S., 2004. "Are there civic returns to education?," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 1697-1720, August.
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  30. Sarah Turner, 2004. "Going to College and Finishing College.Explaining Different Educational Outcomes," NBER Chapters, in: College Choices: The Economics of Where to Go, When to Go, and How to Pay For It, pages 13-62 National Bureau of Economic Research, Inc.
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