Association for Public Policy Analysis & Management

In light of earnings declines for those without a college degree and rising demand for skilled workers, community college career technical education (CTE) has increasingly become the target of policy and funding initiatives. This makes it essential to better understand the training potential of CTE programs. In this paper I present causal estimates of the impact of a degree in registered nursing on labor market outcomes by leveraging a lottery-based admissions policy at a large community college.

Among community college career technical programs, those that train workers for health professions are of particular interest for a number of reasons. First, the health workforce has undergone a rapid recent boom, especially for jobs that require less than a bachelor's degree. Moreover, health training programs have great promise as drivers of upward mobility: students tend to be older, come from lower income families, and many are first-generation college students. Yet another reason to study health training programs is that they have become the object of attention from policymakers, at both the federal and state level.

In this paper I measure the labor market effects of a high-demand health program in California. Because the program is oversubscribed, administrators have used a lottery system to determine admission for more than a decade. I use the result of the admissions lottery as an instrumental variable, since it strongly determines completing a degree in nursing but is unrelated to student characteristics. I focus on earnings as well as employment outcomes.

I use administrative student data from the California Community Colleges for 1992-2015, which include information on course-taking, degree and certificate completion, and demographics. These data are matched to quarterly earnings and industry of employment records from the state’s UI system, covering the same time period. I then match these student records to the results of each random lottery conducted at the college since 2005.

I find that students earning a degree saw an approximately 80-100 percent increase in income relative to students who did not finish. These estimates, while large, are consistent with those found by researchers using other methods across various states. Moreover, I also estimate the effect of the degree through a more commonly used individual fixed effects approach, and find that both sets of estimates are similar. The effects I find are due to the intensive margin: program graduates did not see significant effects on employment, but were much more likely to work in the health industry. In ongoing work, I am assessing whether these large returns outweigh the commonly cited costs of expanding the program, especially in light of reported nurse shortages.