Association for Public Policy Analysis & Management

Panel: The Link between Secondary and Post-Secondary Education and the Labor Market

(Education)

This panel explores the link between secondary and post-secondary education and the labor market. It starts by trying to understand whether choices made in high school and college affect labor market outcomes and how. Do secondary track choices matter? How about college selectivity and major? Seeking to further understand the broader interlinkage between post-secondary education and the labor market, it then explores whether the distribution of higher education institutions and students affect labor market dynamics and outcomes. And, conversely, do labor market shocks affect postsecondary demand and subsequent labor market outcomes? The papers in this panel seek to answer these questions. Each paper leverages novel sources of data that span unique administrative data from three countries (Chile, Sweden and the United States), innovative methods, and afford a policy relevant focus in that they inform how higher education policy may affect labor market dynamics and outcomes.

 

The first paper studies the role of multi-dimensional ability and secondary track choices on college preparedness and labor market outcomes using Swedish administrative data. It finds that high school decisions are an important determinant of college enrollment, college major choice, college graduation, and labor market outcomes. It further finds that the labor market returns to abilities and secondary track choices vary considerably by degree and major.

 

The second paper studies how the choice of college and major are related to life cycle earnings in a context where selection bias can potentially confound direct measurement using Chilean administrative data. Using three decades of ranked college applications and assignment data for the population of college students in Chile that are linked to a decade of administrative tax data on earnings the study finds that there is considerable heterogeneity that is predictable across options. This heterogeneity can be explained by a combination of course content and observable comparative advantage given by interactions of major characteristics and student skills.

 

The third paper examines the effect of postsecondary supply conditions –number and composition of higher education institutions—on labor market dynamics using a merger of industry, occupation and administrative education data from the United States. Using a novel instrumental variables strategy, the paper argues that postsecondary institutions in some areas are better positioned to retrain workers than others, thus creating a link between higher education supply conditions and unemployment dynamics. Thus the composition of post-secondary supply in an area can play a key role in affecting recovery from recessions and in general labor market cycles.

 

The fourth paper provides new evidence on the returns to further education for unemployed workers by following the entire population of unemployment insurance (UI) claimants in the state of Ohio for at least four years post-displacement. Followed by temporarily depressed earnings among enrollees while they are in school, there are sustained positive returns to schooling two years post-enrollment for unemployed workers who pursued further education.