RT Journal Article
SR Electronic
T1 College Choice, Private Options, and the Incidence of Public Investment in Higher Education
JF Journal of Human Resources
JO J Hum Resour
FD University of Wisconsin Press
SP 0422-12291R2
DO 10.3368/jhr.0422-12291R2
A1 Bound, John
A1 Simon, Andrew
YR 2024
UL http://jhr.uwpress.org/content/early/2024/05/01/jhr.0422-12291R2.abstract
AB Previous measures of the incidence of public investment in higher education focus on the transfer to public college students. However, they miss potential general equilibrium effects on the private college and labor markets. We show that capturing these spillovers is important for characterizing incidence using a model of higher education that we validate with quasi-experimental variation in state spending. Unlike previous measures, we find that high-income-modest-ability students especially benefit since they are only admitted to high-quality private colleges when public spending is high. Decreased investment also reduces educational attainment, raising the college wage premium. This exacerbates private college market power.