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The labor-market returns to community college degrees, diplomas, and certificates (Jepsen et al. 2014)

Citation

Jepsen, C., Troske, K., & Coomes, P. (2014). The labor-market returns to community college degrees, diplomas, and certificates. Journal of Labor Economics, 32(1), 95-121.

Highlights

  • The study’s objective was to examine the effect of earning community college degrees, diplomas, and certificates on students’ later earnings.
  • Using administrative data from the Kentucky Community and Technical College System (KCTCS), the National Student Clearinghouse, and Kentucky’s unemployment insurance program, the authors compared the outcomes of students who completed college degrees, diplomas, and certificates with those of students who did not.
  • The study found that community college degrees, diplomas, and certificates improved earnings for those who received them, compared with those who did not receive them but were otherwise similar.
  • The quality of causal evidence presented in this report is moderate because it was based on a well-implemented nonexperimental design; this is the highest causal evidence rating possible for a nonexperimental design. This means we are somewhat confident that the estimated effects are attributable to earning community college degrees, diplomas, and certificates, but other factors might also have contributed.

Intervention Examined

The Program Under Study

Features of the Intervention

The program under study was typical community college enrollment and participation at KCTCS, with no additional services or enhancements.

Features of the Study

The study used administrative data from the KCTCS, the National Student Clearinghouse, and the state’s unemployment insurance program. The study sample included 25,453 students who entered KCTCS during the 2003–2004 or 2004–2005 school years with the intent of receiving an associate’s degree, diploma, or certificate. The sample was 65 percent female, 77 percent white, and 23 percent nonwhite. Average age at entry was 31 years. The authors noted that the sample was younger and had lower income than the state average, which is consistent with the fact that students tend to be younger than the general population and earnings among the young are below the general population average.

The authors used a difference-in-differences model to examine the effect of receiving a degree, diploma, or certificate (award). Essentially, the model compared the earnings trajectories of the same people before and after receiving an award with the earnings trajectories of similar people who did not receive an award. The model included controls for students’ demographic characteristics that change over time, the county unemployment rate, and a set of variables measuring students’ self-reported educational intentions.

Findings

  • Women and men who received associate’s degrees earned an average of $2,363 and $1,484, respectively, more in quarterly earnings than similar women and men who did not receive an associate’s degree. These differences were statistically significant.
  • Women and men who received diplomas earned an average of $1,914 and $1,265, respectively, more in quarterly earnings than similar women and men who did not receive a diploma. These differences were statistically significant.
  • Women who received certificates earned an average of $299 more quarterly than similar women who did not receive a certificate. This difference was statistically significant. There was no statistically significant impact of receiving a certificate on the earnings of men in the sample.

Considerations for Interpreting the Findings

The authors noted that their study relied on a fundamental assumption, common to any difference-in-differences model, that the pre- and post-KCTCS earnings patterns were similar between students who received an award and students who did not. If a student experienced an event or situation that affected both award receipt and earnings trajectories, the model would not produce valid estimates. However, they noted that the number of such events should be small, on average.

Causal Evidence Rating

The quality of causal evidence presented in this report is moderate because it was based on a well-implemented nonexperimental design; this is the highest causal evidence rating possible for a nonexperimental design. This means we are somewhat confident that the estimated effects are attributable to receiving community college degrees, diplomas, and certificates, but other factors might also have contributed.

Reviewed by CLEAR

September 2015