The mixed effects of community colleges
Do two-year colleges boost earnings for those who attend?
Community colleges provide a path to higher education for many people who wouldn’t attend a traditional, four-year university.
But two-year colleges also divert students away from starting their education at better-resourced four-year institutions, according to a paper in the American Economic Review.
Using Texas administrative data, author Jack Mountjoy analyzed these competing effects of community colleges on future earnings and found mixed results. The findings illustrate the subtle ways that large-scale policies can affect different groups in different ways.
Figure 8 from Mountjoy’s paper shows the impact of community colleges on the quarterly earnings of men and women in the early years of their careers.
Figure 8 from Mountjoy (2022)
The left panel plots the average income effect of community college by age. For women, enrolling in a two-year program boosts quarterly earnings by $500 almost immediately after leaving school—an effect that climbs to nearly $2,000 by age 30. But for men, going to community college actually results in lower earnings through the first decade of their careers.
The middle panel shows the impact on earnings among those who wouldn’t have otherwise attended any college and illuminates why women gained much more than men overall. Many women benefited significantly throughout their twenties from attending community college. But men on the margin between two-year college and no college who do enroll end up spending their twenties catching up to the earnings of those who do not enroll.
The right panel shows the earnings effects on those who were diverted from attending a four-year institution, revealing no strong trend. Although there is a nearly constant negative impact on the earnings of women in this group throughout their twenties, the significant gains for women who wouldn't have attended any college more than makes up for this and explains the positive net effect.
While the results indicate that expanding access to two-year colleges boosts upward mobility overall, they also highlight the trade-off between attracting new students into higher education and diverting those who might have otherwise attended four-year institutions. In addition, the research shows that women in both groups experience larger effects than men.
“Community Colleges and Upward Mobility” appears in the August 2022 issue of the American Economic Review.