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Estimating the returns to community college schooling for displaced workers (Jacobson et al. 2004)

Citation

Jacobson, L., LaLonde, R., & Sullivan, D. (2004). Estimating the returns to community college schooling for displaced workers. (IZA discussion paper no. 1018). Bonn, Germany: Institute for the Study of Labor.

Highlights

  • The study’s objective was to examine the impact of taking community college courses on the earnings of displaced workers in Washington State.
  • The authors matched data from unemployment insurance wage records to community college records and used regression models to compare the outcomes of displaced workers who earned community college credits with the outcomes of those who did not.
  • The study found that long-term earnings among displaced workers increased 9 percent for men and 13 percent for women as a result of one year of community college, and that the effects were largest for those who took quantitative or vocational courses.
  • The quality of causal evidence provided in this study is moderate. This means we are somewhat confident that the estimated effects are attributable to the community college course taking, but other factors might also have contributed.

Intervention Examined

The Study

Features of the Intervention

The program involved typical community college enrollment and participation, with no additional services or enhancements.

Features of the Study

The authors matched data from unemployment insurance wage records to community college records to create a database. Unemployment insurance data covered 1987 to 1996 and included earnings, hours worked, hourly wages, employers, and employees’ demographics. The community college data set covered 1989 and 1995 and included information on students’ demographics, courses enrolled and completed, and grades. The authors identified those workers in Washington State ages 22 to 60 with at least three years of paid work experience who were laid off from 1990 to 1994 and had a valid unemployment insurance claim; in total, 97,000 workers fit these criteria. The authors then constructed a treatment group consisting of about 16,000 of those workers who had earned at least one college credit at one of Washington’s 25 community colleges by 1996; the remaining people in the sample comprised the comparison group.

The authors estimated a series of regression models comparing the outcomes of displaced workers who earned community college credits with those who did not. Regression models included time, worker, and time-worker fixed effects.

Findings

  • The study found that long-term earnings among displaced workers increased 9 percent for men and 13 percent for women as a result of earning one year of community college credits.
  • The effect of community college course-taking on earnings was largest for quantitative or vocational courses, for which earnings increased by 14 percent for men and 29 percent for women. Other courses resulted in little or no increase in earnings.
  • The authors estimated that about one-third of the increase in earnings was due to an increase in hourly wages and the other two-thirds was due to an increase in the number of hours worked.

Considerations for Interpreting the Findings

The study was a well-implemented non-experimental design. The study authors controlled for many time-variant and time-invariant characteristics of displaced workers that might influence both the decision to complete community college courses and later earnings.

Causal Evidence Rating

The quality of causal evidence presented in this study is moderate because it was based on a well-implemented non-experimental design. This means we are somewhat confident that the estimated effects are attributable to taking community college courses, but other factors might also have contributed.

Additional Sources

Jacobson, L., LaLonde, R., & Sullivan, D. (2005). Estimating the returns to community college schooling for displaced workers. Journal of Econometrics, 125, 271-304.

Reviewed by CLEAR

November 2015

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