Dynarski, Susan. 2008. “Building the Stock of College-Educated Labor.” Journal of Human Resources 43(3): 576–610.
Half of college students drop out without completing a degree. This paper establishes a causal link between college costs and degree completion. I use quasi-experimental methodology to analyze two state scholarship programs. The programs increase the share of the exposed population with a college degree by three percentage points, with stronger effects among women. A cost-benefit analysis indicates that the programs are socially efficient at rates of return to schooling as low as 5 percent. Even with the offer of free tuition, many students continue to drop out, suggesting tuition costs are not the only impediment to college completion.
Susan Dynarski is an associate professor of public policy at the Kennedy School of Government, Harvard University. She is grateful to the Russell Sage Foundation and the Atlantic Philanthropies for funding. Betsy Kent, J.D. LaRock, Isabel Millan-Valdes, Judith Scott-Clayton and Juan Saavedra provided excellent research assistance. Joe Doyle, Amy Finkelstein, Brian Jacob, Jeff Liebman, Erzo Luttmer, Ben Olken, Cecilia Rouse, Sarah Turner and seminar participants at Dartmouth, Harvard, MIT, the National Bureau of Economic Research, Princeton University, University of California at Davis, University of Michigan and University College, London were generous with their helpful comments. The data used in this article can be obtained January 2009 through December 2012 from Susan Dynarski (dynarski@nber.org).