Entry and Competition in the Market for Short-Cycle Programs

Short-cycle higher education programs form skilled human capital in two or three years and areeminently oriented to the labor market. While they could play a key role in the upskilling and reskilling of theworkforce required for employment recovery after the COVID-19 pandemic, they will only do so if their supplyresponds fast and nimbly to the skill needs to local labor markets. This paper studies the entry, competition, andturnover of short-cycle higher education programs (SCPs) in Colombia. It documents a large expansion in the number ofprograms over the past fifteen years and studies the frequency of program entry and exit. It finds that themarket for SCPs is more dynamic than the market for bachelor's programs, as it exhibits greater turnover or“churn" of programs, with a significantly higher rate of program entry and exit in a given year. Exploiting dataon local productivity and employment by field of study, the paper finds that SCPs are more responsive thanbachelor's programs to changes in local labor demand. Among SCP providers, private and non-university institutionsrespond the most to the local economy. SCP entry is deterredby the presence of competitors and responds to cost considerations, particularly among private institutions. Fora given institution, exit and entry decisions are highly correlated within a field of study. While enrollment issensitive to the number of competitors, institutions differentiate their product by tuition, field, andgeographic coverage. Overall, the evidence suggests that SCPs might indeed respond fast and nimbly to the local labormarket needs created by the pandemic.