Association for Public Policy Analysis & Management

For-profit universities in the U.S. experienced phenomenal growth over the past thirty years, despite the fact that they compete with open-enrollment, low-tuition public community colleges. This paper examines how for-profit and community colleges respond differently to increases in demand for occupational education. I exploit a regulatory change, which broadened the scope of practice for dental assistants (DAs) and led to significant increases in DAs' wages and employment. In response to this change, for-profit universities substantially expanded their DA programs, whereas most community college DA programs remained their existing size. Moreover, community colleges that charged a high premium for the DA program expanded their DA programs, while those that did not charge a premium downsized their DA programs. These results are consistent with a for-profit sector that maximizes profits and a public sector that sets capacity to balance budget.