Academic journal article American Economist

Differences in the College Enrollment Decision across Race

Academic journal article American Economist

Differences in the College Enrollment Decision across Race

Article excerpt

INTRODUCTION

Educational attainment in the United States and several other developing countries has grown substantially in the past 50 years. Much of this growth is evident in the college enrollment data, which begins to rise in the United States around 1980. However, both the percent of those enrolled in college and the growth rates are not equal across races/ethnicities. Figure 1 graphs white, black, and Hispanic college enrollment rates using 2004 data from the National Center for Education Statistics (NCES). Figure 1 shows that black and Hispanic enrollment rates are consistently lower than white enrollment rates after 1980. While whites and blacks have roughly the same upward trend in education after 1990, Hispanic enrollment rates are considerably more volatile. After hovering around 30 percent throughout the 1980s, Hispanic enrollment rates jump to about 35 percent after 1990 and fluctuate around this figure until the end of the sample frame.

The first attempts to understand the growth in college enrollment produced a variety of approaches: comparisons of college and high school wage returns, macroeconomic effects of human capital attainment, and the effect of changes in the pecuniary costs of college, i.e. tuition and financial aid. As many of these authors have already discussed, the importance of their research lies in the substantial percentage of government budgets devoted to education. The U.S. Department of Education estimates roughly $900 billion was spent on all levels of education for the academic year 2004-2005, a majority of which comes from public sources. These public outlays represent the belief of governments that education creates positive externalities that all citizens can enjoy.

We enter this literature by examining the differences in college enrollment rates across races by focusing on the enrollment decision of the recent high school graduate. This decision is influenced by several factors, including tuition, student achievement, high school quality, and family background characteristics such as household income and parents' education. We investigate how these factors and others influence the college attendance decision, and compare these effects across whites and blacks using data provided by NCES.

In addition to the broad motivation of education research discussed above, research on racial differences in education provides important information for colleges and universities. Many post-secondary schools have special programs to improve minority enrollment in order to increase diversity. These programs are particularly important for private institutions, which tend to have lower minority enrollment because of higher tuition. For public institutions, these programs combat criticism for under-representing minorities and those with low incomes relative to their state's population. In addition, there are several government programs with the goal to increase educational attainment for those with below average earnings, e.g. subsidized student loans and Pell grants. Since there is a larger percentage of minorities in this population, these programs should help decrease the gap in earnings between whites and other minorities in the long run. Further, these programs are becoming increasingly more important as the wage gap between terminal high school and college graduates continues to grow.

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We compare the black and white college enrollment decision and find that it should be estimated separately. The evidence comes from econometric tests, which confirm systematic differences in the unexplained component of the enrollment decision, and by simply examining the coefficients of separate estimations. Since blacks and whites have different responses to the determinants of college attendance, any conclusions drawn from estimations not taking this heterogeneity into account are misleading. For example, pooling blacks and whites into one sample causes results that look similar to the white model alone since the whites constitute a much larger percentage of the population. …

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