Understanding Decisions and Outcomes in the College and Early Post-College Periods

Berea College, Berea KY

Investigators

Abstract

While spending on higher education represents a substantial portion of government expenditures and while the importance of the early portion of individuals' working lives has been well-recognized, policymakers are currently faced with the task of designing effective policies with only an incomplete understanding of many important issues related to the college and early post-college periods. This project combines the collection of state-of-the-art survey (and administrative) data with innovative analyses to provide new evidence about many of these issues. What takes place during the college portion of one's lifetime has traditionally been somewhat of a black box in which students are observed entering with certain observable background characteristics and are eventually seen leaving having made a variety of decisions and having realized a number of related outcomes. Similarly, what takes place during the early portion of one's post-college lifetime has also traditionally been somewhat mysterious. While recent research has stressed the importance of looking inside the college and early post-college black boxes, evidence about the college period and the early post-college period has remained at best incomplete. This is the case, in large part, because standard longitudinal surveys are often not well-positioned to provide data that allow issues of interest to be studied at their most fundamental levels. This reality motivates the survey component of the current project which, building on previous research funded by the National Science Foundation, involves the continued collection of a longitudinal survey (the Berea Panel Study) that is unequaled in its depth and detail. The survey efforts pay careful attention to recent advances in survey methodology, and, at the culmination of the three-year project period, two cohorts of college students will have been followed very closely from the time they entered college until past the age of thirty. From a feasibility standpoint, the importance of collecting person-specific information that is substantially more detailed than what is available from other existing data sources necessitates the focus on a single institution (Berea College). However, while this influences the exact extent to which the conclusions can be generalized, it seems reasonable to believe that the basic elements that go into the decisions of students in the collected sample will be generally similar to those that go into the decisions of individuals from similar backgrounds who enroll at other schools. Thus, the innovative nature of the survey collection efforts has the potential to provide policymakers with a much improved understanding of the workings of the higher education process and the early post-college period. At its most general level, the goal of the data collection in the project is to allow analyses which provide new understandings of how earnings/wages are determined at different stages of the early post-college period. This, in turn, requires one to understand: 1) what determines a person's stock of human capital (i.e., his skills and abilities) at the time he/she leaves college and at different points in the early post-college period? and 2) how do individuals make decisions that determine how much and what type of human capital is accumulated? Then the need for an ambitious data collection effort comes from the fact that virtually all decisions and outcomes in the college and early post-college periods are of relevance for understanding these two questions. Many important decisions and outcomes that ultimately influence earnings take place during college. While much previous research has related decisions and outcomes during college to a set of observable background characteristics of students, it is much more difficult to understand the underlying processes by which decisions are made or outcomes are produced. This is the case, in large part, because a particular decision or outcome may be influenced by a rather large and potentially complicated set of factors. As such, an important feature of the data collection is that, paying close attention to economic theory, the survey instruments were designed to collect information about comprehensive sets of factors that could influence a variety of college decisions/outcomes. These decisions/outcomes include those related to: educational attainment/drop-out, college major, college grade performance, study effort, peer effects, and social networks. Other important decisions and outcomes that potentially influence earnings after individuals leave college and enter the workforce, include decisions/outcomes related to: 1) job search and job changing behavior, 2) marriage and fertility, 3) time away from the labor market, 4) the type of jobs held or skills accumulated while on the job. The depth of the Berea Panel Study data allows an examination of these decisions/outcomes, in general, and for different subgroups of the population. For example, of particular importance will be the ability of the survey to provide new evidence about the underlying reasons for differences in earnings by gender. In addition to the substantive contribution of providing new evidence about the college and early post-college periods, the project will likely motivate/guide future data collection and analyses involving nationally representative samples. Generally, this is the case because the project illustrates the value of collecting detailed longitudinal data with the analyses of very specific models and issues in mind. As one of many specific examples of the broader impacts of the project?s survey efforts, while the interest in expectations data has increased substantially in recent years, much remains unknown about the full potential of using such data in economic contexts. The Berea Panel Study was perhaps the first longitudinal survey to have a strong focus on the elicitation of expectations data, and the analyses in the project will examine a variety of potential uses for this type of data that would not be possible to examine using other data sources. Moreover, because the longitudinal collection of expectations data allows one to directly measure revisions to expectations, the project will might provide the best direct evidence about the importance of learning per se in determining outcomes in education and the early portion of one's working life.