Impact of Public Spending on Postsecondary Attainment

Lecture | December 11 | 1 p.m. PST | Video

Increasing the postsecondary attainment rate of college-age youth is an important economic priority in the U.S. and in other developed countries, but little is known about whether different forms of public subsidy can increase degree completion. In this study, we compare the impacts of public spending on postsecondary attainment when it is spent on lowering tuition prices versus increasing the quality of the college experience. We do so by estimating the causal impact of changes in tuition and spending on enrollment and degree completion in U.S. public postsecondary institutions between 1990 and 2013. We estimate these impacts using a newly assembled data set of legislative tuition caps and freezes, combined with variation in exposure to state budget shocks that is driven by differences in historical reliance on state appropriations. We find large impacts of spending on enrollment and degree completion. In contrast, we find no impact of price changes. Our estimates suggest that spending increases are more effective per-dollar than price cuts as a means of increasing postsecondary attainment.

Christopher Walters is an Associate Professor in the Department of Economics at the University of California, Berkeley. He joined the Berkeley faculty as an assistant professor in 2013 after completing a PhD in economics at MIT. Dr. Walters is an applied microeconomist with expertise in labor economics, applied econometrics, causal inference, and the economics of education. His recent work includes studies using experiments to detect labor market discrimination, evaluations of school choice programs, and the econometrics of policy evaluation. Walters is a Research Associate at the National Bureau of Economic Research, a Faculty Affiliate at the MIT School Effectiveness and Inequality Initiative (SEII) and an affiliate of J-PAL North America.

David Deming is a professor at the Harvard Kennedy School and the Harvard Graduate School of Education. He is the faculty director of the Malcolm Wiener Center for Social Policy, and a Research Associate at the National Bureau of Economic Research. His research focuses broadly on the economics of skill development, education and labor markets. Dr. Deming is a principal investigator (along with Raj Chetty and John Friedman) at the CLIMB Initiative, an organization that seeks to study and improve the role of higher education in social mobility.