Financial aid from the Susan Thompson Buffett Foundation (STBF) provides comprehensive support to a college population similar to that served by a host of state aid programs. In conjunction with STBF, we randomly assigned aid awards to thousands of Nebraska high school graduates from low-income, minority, and first-generation college households. Randomly-assigned STBF awards boost bachelor's (BA) degree completion for students targeting four-year schools by about 8 points. Degree gains are concentrated among four-year applicants who would otherwise have been unlikely to pursue a four-year program. Degree effects are mediated by award-induced increases in credits earned towards a BA in the first year of college. The extent of initial four-year college engagement explains impact differences by target campus and across covariate subgroups. The projected lifetime earnings impact of awards exceeds marginal educational spending for all of the subgroups examined in the study. Projected earnings gains exceed funder costs for urban students and for students with relatively weak academic preparation.
Alternative work arrangements, defined both by working conditions and by workers’ relationship to their employers, are heterogeneous and common in the U.S. This article reviews the literature on workers’ preferences over these arrangements, inputs to firms’ decision to offer them, and the impact of regulation. It also highlights several descriptive facts. Work arrangements have been relatively stable over the past 20 years, work conditions vary substantially with education, and jobs with schedule or location flexibility are less family-friendly on average. This last fact helps explain why women are not more likely to have schedule or location flexibility and seem to largely reduce hours to get more family-friendly arrangements.
We estimate the marginal value of non-work time (MVT) using a field experiment. We offered job applicants randomized wage-hour bundles. Choices over these bundles yield estimates of the MVT as a function of hours, tracing out a labor supply relationship. The substitution effect is positive. Individual labor supply is highly elastic at low hours and more inelastic at higher hours. For unemployed applicants, our preferred estimate of the average opportunity cost of a full-time job due to lost leisure and household production is 60% of after-tax marginal product, and 72% when including fixed costs of employment and child care costs.
Though online technology has generated excitement about its potential to increase access to education, most research has focused on comparing student performance across online and in-person formats. We provide the first evidence that online education affects the number of people pursuing formal education. We study Georgia Tech's Online M.S. in Computer Science, the earliest model to combine the inexpensive nature of online education with a highly-ranked degree program. Regression discontinuity estimates exploiting an admissions threshold unknown to applicants show that access to this online option substantially increases overall enrollment in education, expanding the pool of students rather than substituting for existing educational options. Demand for the online option is driven by mid-career Americans. By satisfying large, previously unmet demand for mid-career training, this single program will boost annual production of American computer science master's degrees by about seven percent. More generally, these results suggest that low-cost, high-quality online options may open opportunities for populations who would not otherwise pursue education.
Do single women avoid career-enhancing actions because these actions signal undesirable traits, like ambition, to the marriage market? While married and unmarried female MBA students perform similarly when their performance is unobserved by classmates (on exams and problem sets), unmarried women have lower participation grades. In a field experiment, single female students reported lower desired salaries and willingness to travel and work long hours on a real-stakes placement questionnaire when they expected their classmates to see their preferences. Other groups' responses were unaffected by peer observability. A second experiment indicates the effects are driven by observability by single male peers.
We use a field experiment to study how workers value alternative work arrangements. During the application process to staff a national call center we randomly offered applicants choices between traditional M-F 9 am – 5 pm office positions and alternatives. These alternatives include flexible scheduling, working from home, and positions that give the employer discretion over scheduling. We randomly varied the wage difference between the traditional option and the alternative, allowing us to estimate the entire distribution of willingness to pay (WTP) for these alternatives. We validate our results using a nationally-representative survey. The great majority of workers are not willing to pay for flexible scheduling relative to a traditional schedule: either the ability to choose the days and times of work or the number of hours they work. However, the average worker is willing to give up 20% of wages to avoid a schedule set by an employer on a week’s notice. This largely represents workers’ aversion to evening and weekend work, not scheduling unpredictability. Traditional M-F 9 am – 5 pm schedules are preferred by most jobseekers. Despite the fact that the average worker isn’t willing to pay for scheduling flexibility, a tail of workers with high WTP allows for sizable compensating differentials. Of the worker-friendly options we test, workers are willing to pay the most (8% of wages) for the option of working from home. Women, particularly those with young children, have higher WTP for work from home and to avoid employer scheduling discretion. They are slightly more likely to be in jobs with these amenities, but the differences are not large enough to explain any wage gaps.
Examining the performance of cashiers in a French grocery store chain, we find that manager bias negatively affects minority job performance. In the stores studied, cashiers work with different managers on different days and their schedules are determined quasi-randomly. When minority cashiers, but not majority cashiers, are scheduled to work with managers who are biased (as determined by an Implicit Association Test), they are absent more often, spend less time at work, scan items more slowly, and take more time between customers. This appears to be because biased managers interact less with minorities, leading minorities to exert less effort. Manager bias has consequences for the average performance of minority workers: while on average minority and majority workers perform equivalently, on days where managers are unbiased, minorities perform significantly better than do majority workers. The findings are consistent with statistical discrimination in hiring whereby because minorities underperform when assigned to biased managers, the firm sets a higher hiring standard for minorities to get similar average performance from minority and nonminority workers.
Referred workers are more likely than nonreferred workers to be hired, all else equal. In three field experiments in an online labor market, we examine why. We find that referrals contain positive information about worker performance and persistence that is not contained in workers' observable characteristics. We also find that referrals perform particularly well when working directly with their referrers. However, we do not find evidence that referrals exert more effort because they believe their performance will affect their relationship with their referrer or their referrer's position at the firm.
In 1997, the ACT increased the number of free score reports it provided to students from three to four, maintaining a $6 marginal cost for each additional report. In response to this $6 cost change, ACT-takers sent many more score reports and applications relative to SAT-takers. They widened the range of colleges they sent scores to, and low-income ACT-takers attended more-selective colleges. Back-of-the-envelope calculations suggest that the policy substantially increased low-income students’ expected earnings. This sizable behavioral change in response to such a small cost change suggests that in this setting, small policy perturbations can have large effects on welfare.
Hiring inexperienced workers generates information about their abilities. If this information is public, workers obtain its benefits. If workers cannot compensate firms for hiring them, firms will hire too few inexperienced workers. I determine the effects of hiring workers and revealing more information about their abilities through a field experiment in an online marketplace. I hired 952 randomly-selected workers, giving them either detailed or coarse public evaluations. Both hiring workers and providing more detailed evaluations substantially improved workers' subsequent employment outcomes. Under plausible assumptions, the experiment's market-level benefits exceeded its cost, suggesting that some experimental workers had been inefficiently unemployed.
Most policies seeking to improve high school achievement historically either provided incentives for educators or punished students. Since 1991, however, over a dozen states, comprising approximately a quarter of the nation’s high school seniors, have implemented broad-based merit scholarship programs that reward students for their high school achievement with college financial aid. This paper analyzes one of these initiatives, the Tennessee Education Lottery Scholarships, using individual-level data from the ACT exams. The program did not achieve one of its stated goals, inducing more students to prefer to stay in Tennessee for college, but it did induce large increases in performance on the ACT. Policies that reward students for performance do affect behavior and may be an effective way to improve high school achievement.
Whether the nation’s most selective and resource-intensive colleges and universities serve as “engines of opportunity” rather than “bastions of privilege” depends on the extent to which they increase the educational attainment of students from the most economically disadvantaged backgrounds (Bowen, Kurzweil, and Tobin, 2005). Less than 11 percent of first-year students matriculating at 20 highly-selective institutions are from the bottom quartile of the income distribution, leading to significant concerns from higher education leaders and policy makers about the role of higher education in promoting intergenerational mobility. Recently, many elite public and private universities have introduced new initiatives designed to encourage the enrollment of low-income students. This paper assesses whether the population of low-income students with high observed academic achievement is sufficiently large that aggressive institutional policies could substantially increase the representation of low-income students at elite colleges. We use administrative data from the SAT and ACT to examine where students currently send scores (as a proxy for application) and assess whether differences in family income affect students’ choice sets. We also discuss how the effect of outreach and financial aid policies on outcomes is likely to differ appreciably across public and private institutions.
Pallais A, Turner S, Dickert-Conlin S, Rubenstein R. Access to Elites. In: Economic Inequality and Higher Education, Access, Persistence, and Success. New York: Russell Sage Foundation ; 2007. pp. 128-156.Abstract
Low-income students are significantly underrepresented at top colleges and universities, institutions perceived as important stepping stones to professional and leadership positions. This paper reviews the literature on the causes of this underrepresentation and addresses to what extent implementation of aggressive recruiting and generous financial aid by universities can reduce it. In particular, it examines recent initiatives by selective colleges to increase both financial aid and information provided to low-income students. While initial research and the popular press suggest that these programs succeed in their aims, we suggest caution in interpreting these results for two reasons. First, evaluation of these programs cannot separate a reshuffling of students among top universities from an increase in the total number of students attending selective institutions. Second, because these programs are often multi-pronged, it is difficult to isolate the effects of particular parts of the initiatives: for example, separating the effects of increased financial aid from those of changing admissions standards.