Date of Award

Spring 2021

Document Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Department

Economics

First Advisor

Altonji, Joseph

Abstract

Two-year colleges, or community colleges, are an integral part of the US higher education system. More than 40% of undergraduate enrollment occurs at the two-year level. Moreover, two-year colleges are closely related to four-year programs, as students frequently transfer between two-year programs and four-year programs. In fact, close to 50% of bachelor's degree recipients have enrolled in two-year colleges before transferring to four-year programs. The following essays discuss three topics related to the US higher education system while emphasizing two-year colleges' role in this system. The first chapter studies policies that can address the low completion rate of two-year college students. Utilizing two recent institutional reforms in the University System of Georgia, I show that allowing community colleges to offer bachelor's degrees and consolidating institutions increase two-year students' bachelor's degree attainment by around 3 percentage points, which represents a 20% improvement. Both reforms increased the two-to-four transfer rate, and institutional consolidations also increased bachelor's degree attainment, conditional on transferring. Moreover, I find evidence that a reduced loss of credits during transfer is the driving force of the improvements. In particular, the reforms reduced credits lost during transfer by around 40%. The second chapter examines whether free community college could fulfill its promise to boost upward mobility or create a trap that promotes associate degrees over the more lucrative bachelor’s degrees. Using adminisitrative data from Texas, I build and estimate a model of college choice, educational attainment, and earnings that allows students to transfer between institutions, and captures the complex credit transfer rules between community colleges and four-year colleges. Leveraging this model, I find that providing free community college improves students' welfare and associate degree attainment, but decreases bachelor's degree attainment by 7 percentage points (a 21% decrease) and average life-time income by more than 1%. This is because the policy diverts students to the less lucrative community colleges and subjects more students to imperfect information about the transfer pathways. In particular, students transferring from community colleges to four-year colleges severely underestimate the credit lost before transferring. I propose a cost-equivalent proportional tuition reduction that creates notably larger welfare and income improvements. In addition, I find that eliminating credit lost during transfer and providing perfect information on credit transfer rules significantly improves transfer students' outcomes. Finally, I show that the existence of transfer options is crucial for the overall bachelor’s degree attainment rate and has a modest impact on student welfare. While community colleges educate more than 40% of US undergraduates, anecdotal evidence suggests widespread discrimination against community college graduates. In the third chapter, I use a national labor market audit study to examine the existence and nature of such discrimination. I send out more than 3600 artificial job applications through one of the largest online job platforms in the US. All applicants have four-year Bachelor's Degrees, and a randomly selected subset of the applicants attended community colleges for their first two years of college. I find that the callback rate from accounting firms is 50% lower for applicants with community college experience. This is equivalent to the effect of a drop in college GPA from 3.6 to 3.2. In comparison, sales and marketing positions' callback rate do not exhibit such a discrepancy. Furthermore, I find suggestive evidence that the discrimination is due to irrational bias on community college students' ability. I also find that this bias significantly reduces employers' valuation of the candidates' other qualifications, such as college selectivity.

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