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Do Human Capital Decisions Respond to the Returns to Education? Evidence from DACA

Author

Listed:
  • Elira Kuka

    (Southern Methodist University)

  • Na'ama Shenhav

    (Dartmouth College)

  • Kevin Shih

    (Rensselaer Polytechnic Institute)

Abstract

This paper studies the human capital responses to a large shock in the returns to education for undocumented youth. We obtain variation in the benefits of schooling from the enactment of the Deferred Action for Childhood Arrivals (DACA) policy in 2012, which provides work authorization and deferral from deportation for high school educated youth. We implement a difference-in-differences design by comparing DACA eligible to non-eligible individuals over time, and we find that DACA had a significant impact on the investment decisions of undocumented youth. High school graduation rates increased by 15 percent while teenage births declined by 45 percent. Further, we find that college attendance increased by 25 percent among women, suggesting that DACA raised aspirations for education above and beyond qualifying for legal status. We find that the same individuals who acquire more schooling also work more (at the same time), counter to the typical intuition that these behaviors are mutually exclusive, indicating that the program generated a large boost in productivity.

Suggested Citation

  • Elira Kuka & Na'ama Shenhav & Kevin Shih, 2018. "Do Human Capital Decisions Respond to the Returns to Education? Evidence from DACA," Departmental Working Papers 1802, Southern Methodist University, Department of Economics.
    • Handle: RePEc:smu:ecowpa:1802
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    Keywords

    Returns to education; schooling; fertility; amnesty; undocumented immigrants;
    All these keywords.

    JEL classification:

    • I20 - Health, Education, and Welfare - - Education - - - General
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J1 - Labor and Demographic Economics - - Demographic Economics

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