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The Returns to College Persistence for Marginal Students: Regression Discontinuity Evidence from University Dismissal Policies

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  • Ben Ost
  • Weixiang Pan
  • Douglas Webber

Abstract

We estimate the returns to college using administrative data on both college enrollment and earnings. Exploiting that colleges dismiss low-performing students on the basis of exact GPA cutoffs, we use a regression discontinuity design to estimate the earnings impacts of college. Dismissal leads to a short-run increase in earnings and tuition savings, but the future fall in earnings is sufficiently large that 8 years after dismissal, persisting students have already recouped their up-front investment with an internal rate of return of 4.1%. We provide a variety of evidence that manipulation of the running variable does not drive our results.

Suggested Citation

  • Ben Ost & Weixiang Pan & Douglas Webber, 2018. "The Returns to College Persistence for Marginal Students: Regression Discontinuity Evidence from University Dismissal Policies," Journal of Labor Economics, University of Chicago Press, vol. 36(3), pages 779-805.
    • Handle: RePEc:ucp:jlabec:doi:10.1086/696204
    DOI: 10.1086/696204
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    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education

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