Acknowledgements
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Introduction
Over the years, larger and larger proportions of high school graduates have enrolled in 4-year colleges. While many people view college as essential to success in the labor market, the movement toward 4-year colleges also has its critics. These critics contend that
the public has come to believe that almost all high school graduates should go to college;
this "college movement" is sweeping many marginally qualified or unqualified students into college, and hence the average ability of college students has declined;
as a result of these declining ability levels, college noncompletion and dropout rates have increased;
many noncompleters do poorly in the labor market and would have been better advised to pursue other education and training options;
these noncompleters are also burdened by unnecessary debts from college loans; and
even college graduates are not doing very well in the labor market.
This research synthesis examines the evidence for these arguments.
Is there a college-for-all movement sweeping the country, as the critics contend? There is if, by college, we mean either a 2-year or a 4-year college. Under this definition, almost all high school seniors-around 95 percent—expect to go to college. The proportion expecting to earn a bachelor's degree is smaller, but still substantial (69 percent). Somewhat fewer seniors (54 percent) say that they plan to enroll in the following October, and the proportion actually enrolling in 4-year colleges is smaller still (39 percent). One factor in the widespread college expectations among high school students may be the increased tendency of high school guidance counselors to encourage students of limited ability to attend "college".
Are college students less able than they were several decades ago, as some critics believe? Evidence from standardized achievement test scores suggests that they are about as able now as they were in the past. The test scores of college students did decline markedly from 1967 to 1980. However, they have since risen to at least their previous levels. If there is an increase in the number of lower—ability high school graduates going to "college" today, much of it may be getting absorbed by community colleges.
Critics of the college movement also believe that college completion rates are lower than in the past. The evidence suggests that there has been a modest decrease in the proportions of entering freshmen who complete college within specified periods of time, such as 4, 5, or 6 years. However, at least part of this decrease is explained by the fact that students are typically taking longer to finish college than before. While noncompletion has increased only modestly in the last several decades, the number of students who leave 4-year colleges without graduating is large—over 600,000 per year by our estimate.
The labor-market performance of noncompleters tends to support the critics' case. Of course, they don't earn as much as college graduates, because they get fewer years of education. (If they are males, they also lose the extra earnings that a bachelor?s degree adds even to 4-years of college.) More surprising, noncompleters at 4-years colleges tend to earn less than or the same amount as comparable individuals from 2-years colleges. They also gain about the same amount in tested cognitive skills for each year in college. In addition, they (or their parents) pay more in tuition and are more likely to have student loan debts then are 2-years college students.
Four-college attendees from vocational programs seem to be an exception to the rule that noncompleters don't do very well in the labor market. In controlled studies, their earnings exceeded those of other noncompleters from 4-years and from community colleges. While evidence regarding the benefits of occupational programs in public technical colleges and private proprietary schools is mixed, shorter-term occupational training, such as that provided by the military and certain government programs also seems to pay off.
Since at least the 1970s, some critics of higher education have maintained that college was not a worthwhile investment even for many graduates. We examined the economic outcomes of college graduates in the labor force over time. Beginning in the late 1960s, college graduates of all ages moved into a broader range of jobs than before, including many traditionally considered " non-college"jobs. Most of this change took place in the 1970s. There was a little additional increase in the proportion of college graduates in these jobs in the 1980s. In the 1990s there were signs of a reversal in the pattern, especially among younger college graduates.
By 1994, about one tenth of employed college graduates aged 25-44 worked in occupations where the average education level was equal to or less than a high school diploma. The other 9 tenths were about evenly divided between college-level jobs and those requiring "some college", based on the average education levels of their incumbents in the early 1970s. College graduates in non-graduate jobs had lower literacy scores than those in college jobs, but they had much higher scores than high school graduates in jobs having the same mean education level as their own. At all job levels examined, college graduates earned more than high school graduates, and this advantage increased over time. Evidence reviewed later in the synthesis indicates that such premium increases are due largely to rising skill requirements in jobs.
Along with the change in the occupations of college graduates, their real annual earnings (adjusted for inflation) fell during the early 1970s, but then recovered much of their loss. College graduate earnings remained fairly stable, with some fluctuations, from 1975 through the mid-1990s, although they did not return to their 1972 high. On the other hand, the real earnings of high school graduates fell gradually, in an uneven pattern, from 1970s to the mid-1990s, and those of high school dropouts fell off more markedly. In the tight labor market of mid-1998, the earnings of most groups, including low-income workers, improved. The premiums of college graduates-their extra earnings above those of high school graduates, expressed as a percentage-and the rates of return on investment in college also fell in the 1970s, but they increased markedly thereafter. By the 1990s, they were higher than in 1970.
For the average bachelor's degree graduate, then, college is a good investment—graduates realize about a 12 percent return on investment, based on lifetime earnings. Further, the total economic benefits of college completion are probably at least twice the earnings benefits, and college offers a range of noneconomic benefits as well.
The large and rapidly expanding literature on wage inequality helps explain the changes in the economic performance of college graduates over time. College premiums—which express the degree of inequality in earnings between college graduates and high school graduates—dropped in the 1970s because of a great increase in the supply of college graduates. Enrollments ballooned in the late 1960s and early 1970s, encouraged by high premiums in the 1960s and pushed up especially by draft deferrals during the Vietnam War. In the 1980s, the college premium increased sharply, in part because of a deceleration in the growth of the college graduate supply. The main cause of the rising premiums, however, was technological change favoring more skilled workers. New technology, including the computer revolution, tended to replace lower-skilled with higher-skilled workers. As demand for less skilled workers dropped and the range of jobs for which they could compete narrowed, their wages went down. The loss of manufacturing jobs to developing countries exacerbated the labor market problems of less skilled workers, such as high school graduates and high school dropouts, but was not the primary cause. The decline of labor unions and the decline in the real minimum wage in the 1980s also contributed to the growth of wage inequality but were not the primary cause of it.
Skill-biased technological change has been driving up the demand for skills such as those of college graduates for a long time. In 1975, Tinbergen commented on "the race between technological development and access to education." Except in the 1970s, the supply of skills has not kept pace with demand, and the premiums of more skilled workers have increased.
Based on the research, we believe that high school graduates of modest ability or uncertain motivation who are thinking of enrolling in 4-years would be well advised to consider attending 2-year colleges instead. If they did so, they would probably realize the same earnings and cognitive skill gains at lower cost and with less debt. High school guidance counselors should be more realistic than many are at present in advising lower-achieving or less motivated high school seniors about their postsecondary options. Students who do enroll in 4-years should do everything in their power to complete their programs and graduate.
The implications of this research for public policy are harder to draw. It is clear that the nation needs to improve the skill levels of the workforce. How this can best be accomplished is an extremely complex question. We briefly go beyond the research to reflect on various alternative approaches to raising skill levels—increasing the number of 4-college graduates, expanding subbaccalaureate education, improving elementary/secondary education, and expanding continuing occupational education and training. Improved elementary/secondary education seems to offer far-reaching benefits, but more knowledge about the most cost-effective ways to increase skills is needed.
We conclude that since at least the turn of the century, the nation has responded to the growing demand for skills by raising the mean education level of the work force, that is, by adding years of education. This process continues, but as time goes on, the cost of each additional year of education will become less and less affordable, and it will become ever more important to increase the learning and skills yielded by a year of education at earlier stages. Advanced Placement (AP) courses in high school represent a step in this direction.
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| Acknowledgements |
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Introduction |