Class Notes: Financial aid and college completion, education-mortality trends, and more

This week in Class Notes:

• Financial aid boosts four-year college completion rates especially by increasing engagement in the first year of study. 
• There is a bigger gap in mortality rates by education level for white Americans than other racial groups. 
• Mexico’s conditional cash transfer program Progresa led to important gains in human capital and labor outcomes. 

• This week’s top chart shows that providing New York City youth workers a letter of recommendation increased their subsequent employment and earnings. 
• Trevon Logan argues that emancipation “delivered the largest positive productivity shock in U.S. history,” in this week’s choice opinion. 
• Check out our latest piece, from Harry Holzer, on the significant positive impacts of sector-based training on educational and employment outcomes. 
• For your calendar: events focusing on the development of the American economy, how to invest in rural America, and how to achieve more inclusive full employment.  

Financial aid boosts four-year college completion rates through credits earned during the first year

The Susan Thompson Buffett Foundation (STBF) provides financial aid support for Nebraskan students from low-income, minority, and first-generation college households. In a randomized control experiment, Joshua Angrist, David Autor, and Amanda Pallais study the impact of the program on educational attainment. They find an 8 percentage point increase in college completion for students in four-year schools who randomly received the award. This increase is sharpest among those who would have otherwise been unable to undertake a four-year program as well as for nonwhite applicants (12 points) and less-prepared students (14 points). A key factor seems to be the level of initial engagement in a four-year program, measured by college credits attained in the first year. This suggests scope for policies to promote initial engagement to promote BA completion, potentially at a lower cost. 

While white Americans generally have steeper educational-mortality trends, there is heterogeneity in causes of death by race and education

Adam A. Leive and Christopher J. Ruhm analyze education gradients in mortality trends by race and gender, drawing on a sample of 25-64 year old Americans between 2001 and 2018. They find that white Americans of both sexes have the largest education gradient for all-cause mortality. For instance, death rates for highest educated white males are predicted to decline by 2% more per year than the lowest educated ones. Among Black Americans, there were no clear educational gradients in mortality rates, but there were larger reductions in mortality for the bottom two education quartiles. What can help explain these racial differences? The authors point out that white Americans, especially those with less education, were hit hardest by the fatal drug epidemic. Reductions in cancer, cardiovascular, and HIV deaths are dominant causes associated with declining mortality rates, especially for lower-educated Black males.  

Mexico’s conditional cash transfer program led to important gains in human capital and labor outcomes 

Progresa is a Mexican social program. implemented experimentally in 1997-2000, that provides cash transfers to poor rural households, conditional on families keeping their children in school. M. Caridad Araujo and Karen Macours study the long term impact of the program on children who were either infants or about to enter secondary school at the time of program exposure. Twenty years later, the early childhood treatment cohort were 18% more likely to complete upper secondary school and 65% more likely to have already completed some tertiary education outside their home village. Among those transitioning into secondary school, the program increased the likelihood of finishing lower secondary school and translated into a 15% increase in annual labor income and more international migration. These educational and labor market gains were larger and more significant for girls and women. 

Top chart: Providing New York City youth workers a letter of recommendation increased their subsequent employment and earnings 

This week’s top chart highlights the positive and persistent impacts of letters of recommendations on youth employment and earnings in New York City. A summer worker who received a letter was 3.1 percentage points more likely to be hired in the next year. This corresponds to a 4.5% increase over the 70% average employment rate for those without letters. 

Choice opinion: Slavery was never an efficient American economic practice

“Emancipation didn’t destroy an efficient system and lead to economic decline. On the contrary… the benefit [of freedom] to the formerly enslaved far exceeded the associated declines in output of cotton and other relevant goods. So instead of destroying wealth, emancipation actually delivered the largest positive productivity shock in U.S. history. Under conservative assumptions about the value of non-working time to enslaved people, we estimate that the productivity gain was roughly 10% to 20% of gross domestic product,” writes Trevon Logan.

Self promotion: Evidence on sector-based training programs show its significant positive impacts on educational and employment outcomes

Sector-based training can help people without four-year college degrees to find well-paying jobs, according to our colleague Harry Holzer. He highlights programs such as Project Quest, which targets community college students, and Year Up, which targets out-of-school youth. A recent evaluation of these programs, the What Works Clearinghouse’s (WWC) suggested that their impacts were much weaker than have widely been noted. Our colleague Harry Holzer comments on this evidence and argues that the WWC’s report applied an overly-rigid criteria to their assessment: “We need to learn much more about these programs – for instance, how to maintain their cost-effectiveness when we scale them, and perhaps how to extend them to less work-ready individuals,” he writes. “In the meantime, the underlying success of these programs should not be challenged by research summaries with major shortcomings.”

For your calendar: events focusing on the development of the American economy, how to invest in rural America, and how to achieve more inclusive full employment

Development of the American Economy Program Meeting, Spring 2022

NBER

Saturday, March 26, 2022 9 AM EST – 4 PM

Investing in Rural America Conference

Federal Reserve Bank of Richmond

Wednesday, March 30, 2022 8 AM EST – 3:30 PM EST

What Is Inclusive Full Employment?

Federal Reserve Bank of Chicago

Thursday, April 7, 2022 2 PM EST – 3:30 p.m. EST