RESEARCH

This paper analyzes the effect of place-based college scholarship “Promise” programs on receipt of federal student aid. To the extent that “Promise” programs crowd in additional federal aid for lower-income students, they become more cost-effective from the standpoint of local communities. Using staggered adoption of local targeted (income-contingent) and universal student aid programs, and microdata on over 20 million federal student aid applicants, it appears that universal local programs increase the amount of need-based, federal Pell grant aid that students receive by 14%, whereas targeted programs do not have significant crowd-in effects. This difference likely stems from universality improving individuals' awareness of their eligibility for aid; and crowd-in then substantially increases the relative progressivity of universal local programs. Universal programs may be particularly desirable in higher need areas or when universal programs have relatively large positive fiscal externalities, though their advantages diminish if federal aid displaces local funds.

Community colleges potentially offer a cost-effective path to earning a bachelor’s degree, though this path is bumpy for many students. This paper investigates how transfer pathways could be improved, with a focus on the role of specific institutions.  We study the universe of all new undergraduates in the U.S. that receive Federal student aid, tracked across all institutions for eight years.  We first find that BA aspirants that start at a community college are 21.6 percentage points less likely to earn a BA than similar students who start directly at a four-year college, though they accumulate $3,400 less loan debt to do so. Community college thus offers a lower cost, but less certain path to BA completion. We then use the large number of cross-institution transfers occurring in the US student population to identify the contribution of individual institutions to these patterns, while also controlling for unobserved student factors by estimating a student and institution fixed-effects model. We find substantial variation in the estimated impacts of enrolling at individual institutions on students’ likelihood persistence and debt accumulation; however, the difference in persistence effects between the two- and four-year sectors is insufficient to explain the entirety of gap in their BA completion rates. Increasing all two-years’ persistence effects by 1 standard deviation would only increase the BA completion rate by 3.8 percentage points. We conclude that feasible improvements in individual community colleges’ ability to retain students, in isolation, are unlikely to bring meaningful pathway improvement. Rather, the creation of stronger and more effective pathways between specific two- and four-year institutions is likely to generate greater increases in BA degree attainment.

This paper provides new estimates of local job multipliers, the ratio of total jobs generated to some initial number of jobs created from a demand shock. Multipliers greatly affect benefits versus costs of local job-creation policies. These new estimates rely on improved methodology and data. The methodology better captures dynamic effects of demand shocks, specifies the model so that demand shocks are more comparable, and is more general in the types of demand shocks that are considered. The data has more industry detail than that used in previous studies. The local job multipliers estimated tend to be about one-quarter lower than typically estimated local multipliers, closer to 1.5 than to 2.0. In addition, demand shocks to all industries matter, not just to tradable industries. Multipliers are similar across different types of geographic areas, with county multipliers being only one-quarter below commuting zone multipliers and state multipliers only one-quarter above commuting zone multipliers. Multipliers are not larger for larger commuting zones, but they increase in commuting zones that have lower initial employment to population ratios. Multipliers are higher for high-tech industries, particularly in commuting zones with a larger initial high-tech share. In such high-tech local economies, high-tech multipliers may be close to 3. While our high-tech multipliers are greater than for other industries, our estimated high-tech multipliers are less than in some prior studies.

Place-based college scholarships, such as the Kalamazoo Promise, provide students who live in a particular place, and/or who attend a particular school district, with generous college scholarships. An important potential benefit from such “Promise programs” is their short-term effects on local economic development. Generous Promise scholarships provide an incentive for families to locate in a particular place, which may change migration patterns, and potentially boost local employment and housing prices. Using data from the American Community Survey, this paper estimates the average effects of eight relatively generous Promise programs on migration rates and housing prices in their local labor market. The paper finds evidence that Promise programs lead to significantly reduced out-migration rates for at least three years after a Promise program is announced. These reductions in out-migration rates are larger for households with children, and are also larger when we focus on smaller areas around the Promise-eligible zone rather than the entire local labor market. These out-migration effects are large, implying that Promise programs lead to a 1.7% increase in overall population of the local labor market.