The Effect of Promoting Access to Community Colleges on Educational and Labor Market Outcomes

Community colleges offer an affordable post-secondary education and serve as a stepping stone to a four-year college degree. I evaluate two policy counterfactuals designed to promote access to community colleges: 1) tuition subsidies for community colleges and 2) easier transition from two- to four-year colleges. I estimate a structural model of employment and college choices, including two-year colleges, which provide post-secondary education at a lower cost and an opportunity to transfer to four-year colleges. First, I find that full tuition subsidies at two-year colleges increase the average number of years spent at community colleges by 0.63 years and mostly attract students who would have not attended college otherwise. This increase in enrollment in two-year colleges translates into an increase in students' average present discounted value of lifetime income by $20,812, which is larger than the average cost of $12,550; however it does not translate into an increase in the number of transfers and four-year college degrees completed. Second, when two-year colleges better prepare students for the transition to four-year institutions, I find that the average number of years spent at two-year colleges increases by 0.33 years, and the completion rate at four-year colleges increases by 3.1 percent. The average present discounted value of lifetime income increases as well by $16,589