Building Knowledge Stocks: The Role of State Higher-Education Policies

A variety of studies provide evidence that the stock of college-educated labor has fundamental effects on state and local economies through its association with wages, economic growth, personal incomes, and tax revenues. As a result, policymakers in many states try to increase the percentage of the state’s population (or workforce) that has a college degree through the use of various higher-education policies that have the potential to influence the supply side of the labor market. This paper reviews evidence on the effectiveness of these policies in achieving that goal. I discuss several types of policies related to the finance and production of undergraduate education within a state, including expansions in degree production and scholarships to encourage attendance at in-state colleges. The evidence suggests that these policies can affect the stock of college-educated labor within a state, but that effect is limited by the mobility of college graduates across state boundaries. I also discuss location-contingent financial aid, adjustments to the composition of enrollment by residency or by field of study, and internships with state-based employers. More research is needed to identify the causal effects of these policies on the behavior of students and to sort out the responses by students and institutions to changes in state policies

The Effect of College Location on Migration of College-Educated Labor

This paper investigates the impact of attending college in a state on the probability of working in the state. I use information on the set of colleges students applied to as a way to account for selection in college-attendance patterns. For two samples of U.S. undergraduate students, I find a modest link between attending college in a state and working in the state. The magnitude of the effect raises doubts that location choice considerations alone can justify state merit-scholarship programs, an increasingly popular form of student financial aid

In-State versus Out-of-State Students: The Divergence of Interest between Public Universities and State Governments

This paper examines the divergence of interest between universities and state governments concerning standards for admitting in-state versus out-of-state students. We find that public universities set lower minimum admissions standards for in-state than out-of-state applicants, presumably in response to state pressure; while private universities treat both groups equally. However, we also find that favoring in-state applicants goes against states’ long-term financial interest. This is because marginal out-of-state students pay higher tuition than marginal in-state students, pay more in future state taxes, and are equally influenced in whether they locate in the state after graduation by attending public university there

The Changing Composition of American-Citizen PhDs

We describe patterns in the composition of American-citizen doctorate recipients from the early 1960s to 2000. The propensity of bachelor’s degree recipients to earn PhDs varied widely during the 1960s and 1970s, especially for men, but has been relatively constant since the early 1980s. PhD propensity varies widely across students from different types of BA institutions, with higher propensities among those attending research universities and selective liberal-arts colleges. The share of PhDs awarded to women increased dramatically over the past 40 years and was driven largely by increases in the number of women earning BAs

In-State versus Out-of State Students: The Divergence of Interest between Public Universities and State Governments

This paper examines the divergence of interest between universities and state governments concerning standards for admitting in-state versus out-of-state students. States have an interest in using universities to attract and retain high ability individuals because they pay higher taxes and contribute more to economic development. In contrast, universities have an interest in their graduates being successful, but little interest in where students come from or where they go after graduation. We develop and test a model that illustrates the divergence of interest between universities and their states. We find that public universities set lower minimum admissions standards for in-state than out-of-state applicants, presumably following their states' preferences, while private universities on average treat both groups equally. However we find that states in fact gain financially when public universities admit additional out-of-state students. This is because attending a public university in a particular state increases marginal students' probability of locating in the state after graduation by the same amount regardless of whether students are from in-state or out-of-state. And because marginal out-of-state students earn more, their expected future state tax payments are higher. We also estimate states' financial gain when public and private universities admit additional in-state versus out-of-state students who have middle and high ability levels. Surprisingly, we find that high ability students tend to be at least as strongly influenced in their adult location choices by where they attend university than are middle and low ability students. Since high ability students also earn more, this suggests that states gain financially when their universities attract high ability students, regardless of whether the students are from in-state or out-of-state or the universities are public or private. Our results suggest a rationale for public support of flagship public universities that can attract high-ability students.

Going Home after Hurricane Katrina: Determinants of Return Migration and Changes in Affected Areas

This paper examines the decision of Hurricane Katrina evacuees to return to their pre- Katrina areas and documents how the composition of the Katrina-affected region changed over time. Using data from the Current Population Survey, we show that an evacuee’s age and the severity of damage in an evacuee’s county of origin are important determinants of whether an evacuee returned during the first year after the storm. Blacks were less likely to return than whites, but this difference is primarily related to the geographical pattern of storm damage rather than to race per se. The difference between the composition of evacuees who returned and the composition of evacuees who did not return is the primary force behind changes in the composition of the affected areas in the first two years after the storm. Katrina is associated with substantial shifts in the racial composition of the affected areas (namely a decrease in the percentage of residents who are black) and an increasing presence of Hispanics. Katrina is also associated with an increase in the percentage of older residents, a decrease in the percentage of residents with low income/education, and an increase in the percentage of residents with high income/education.Hurricane Katrina; Geographic Mobility; Return Migration; Disasters

Commodity prices, commodity currencies, and global economic developments

In this paper we seek to produce forecasts of commodity price movements that can systematically improve on naive statistical benchmarks, and revisit the forecasting performance of changes in commodity currencies as efficient predictors of commodity prices, a view emphasized in the recent literature. In addition, we consider different types of factor-augmented models that use information from a large data set containing a variety of indicators of supply and demand conditions across major developed and developing countries. These factor-augmented models use either standard principal components or partial least squares (PLS) regression to extract dynamic factors from the data set. Our forecasting analysis considers ten alternative indices and sub-indices of spot prices for three different commodity classes across different periods. We .find that the exchange rate-based model and especially the PLS factor-augmented model are more prone to outperform the naive statistical benchmarks. However, across our range of commodity price indices we are not able to generate out-of-sample forecasts that, on average, are systematically more accurate than predictions based on a random walk or autoregressive specifications.

PhD Attainment of Graduates of Selective Private Academic Institutions

[Excerpt] It is therefore important to understand the forces that have caused a decline in the PhD attainment rate of American college graduates. The fraction of bachelor\u27s recipients who go on to receive PhDs nationwide is influenced by many factors, including high school graduation rates, college enrollment rates of high school graduates, college graduation rates for college enrollees, the distribution of undergraduate majors, and the academic backgrounds of college students. PhD attainment also depends upon changes in the economic rewards to pursuing PhD study relative to entering the workforce or pursuing study for other professional occupations, such as law, medicine, and business. In this article we focus on a homogeneous set of thirty-one highly selective private colleges and universities. The academic aptitudes and preparations of students attending these institutions are among the highest in the nation, and historically students from these institutions have been much more likely to go on to PhD study than the average college graduate nationwide; therefore, the behavior of students from these institutions is of special interest

Declining PhD Attainment of Graduates of Selective Private Academic Institutions

[Excerpt] On average, the typical American citizen who received a PhD during the last 40 years did so approximately 9 years after she received her bachelor’s degree. Thus, if we divide the number of American citizens receiving PhDs in a year by the number of American citizens receiving bachelor’s degrees 9 years earlier, we obtain an estimate of the fraction of American citizen college graduates in the earlier year who ultimately receive PhDs. This fraction rose from .042 for 1954 bachelor’s recipients (1963 PhDs) to about .07 for 1962 bachelor’s recipients (1971 PhDs). The fraction then plummeted over the next decade falling to .026 for 1973 bachelor’s recipients (1982 PhDs) and has been relatively stable, fluctuating between .025 and .028, since then. Of course changes in the probability that bachelor’s recipients go on to receive PhDs nationwide are influenced by many changing demographic trends including changes in high school graduation rates, changes in college enrollment rates of high school graduates, changes in college graduation rates for college enrollees, changes in the distribution of undergraduate majors, and changes in the academic backgrounds of college students. In this paper we focus on a more homogenous set of 31 highly selective private colleges and universities. The academic aptitudes and preparations of students attending these institutions are among the highest in the nation and make this group’s students’ behavior of special interest