Skip to main content
×
×
Home

The Merits of Universal Scholarships: Benefit-Cost Evidence from the Kalamazoo Promise

  • Timothy J. Bartik (a1), Brad Hershbein (a2) and Marta Lachowska (a3)
Abstract

As higher education costs rise, many communities have begun to adopt their own financial aid strategy: place-based scholarships for students graduating from the local school district. In this paper, we examine the benefits and costs of the Kalamazoo Promise, one of the more universal and more generous place-based scholarships. Building upon estimates of the program’s heterogeneous effects on degree attainment, scholarship cost data, and projections of future earnings by education, we examine the Promise’s benefit-cost ratios for students differentiated by income, race, and gender. Although the average rate of return of the program is 11%, rates of return vary greatly by group. The Promise has high returns for both low-income and non-low-income groups, for non-Whites, and for women, while benefit assumptions matter more for Whites and men. Our results show that universal scholarships can reach many students and have a high rate of return, particularly for places with a high percentage of African American students. They also highlight the importance of disaggregating benefits and costs by subgroup when performing benefit-cost analysis when the treatment is heterogeneous.

  • View HTML
    • Send article to Kindle

      To send this article to your Kindle, first ensure no-reply@cambridge.org is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about sending to your Kindle. Find out more about sending to your Kindle.

      Note you can select to send to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be sent to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.

      Find out more about the Kindle Personal Document Service.

      The Merits of Universal Scholarships: Benefit-Cost Evidence from the Kalamazoo Promise
      Available formats
      ×
      Send article to Dropbox

      To send this article to your Dropbox account, please select one or more formats and confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your <service> account. Find out more about sending content to Dropbox.

      The Merits of Universal Scholarships: Benefit-Cost Evidence from the Kalamazoo Promise
      Available formats
      ×
      Send article to Google Drive

      To send this article to your Google Drive account, please select one or more formats and confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your <service> account. Find out more about sending content to Google Drive.

      The Merits of Universal Scholarships: Benefit-Cost Evidence from the Kalamazoo Promise
      Available formats
      ×
Copyright
This is an Open Access article, distributed under the terms of the Creative Commons Attribution licence (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted re-use, distribution, and reproduction in any medium, provided the original work is properly cited.
Corresponding author
*e-mail: Bartik@upjohn.org
References
Hide All
Acemoglu, Daron & Autor, David (2011). Skills, Tasks, and Technologies: Implications for Employment and Earnings. In Card, David & Ashenfelter, Orley (Eds.), Handbook of Labor Economics, part. B (Vol. 4, pp. 10431171). Amsterdam: Elsevier.
Andrews, Rodney J., DesJardins, Stephen & Ranchhod, Vimal (2010). The Effects of the Kalamazoo Promise on College Choice. Economics of Education Review, 29(5), 722737.
Arias, Elizabeth (2014). United States Life Tables, 2010. National Vital Statistics Reports, 63(7), 162.
Bahr, Peter Riley, Dynarski, Susan, Jacob, Brian, Kreisman, Daniel, Sosa, Alfredo & Wiederspan, Mark(2015). Labor Market Returns to Community College Awards: Evidence from Michigan. Center for Analysis of Postsecondary Education and Employment Working Paper.
Bartik, Timothy J.(2009). What Proportion of Children Stay in the Same Location as Adults, and How Does This Vary Across Location and Groups? Upjohn Institute Working Paper No. 09-145.
Bartik, Timothy J. (2011). Investing in Kids. Kalamazoo, MI: Upjohn Institute Press.
Bartik, Timothy J. (2012). Including Jobs in Benefit-Cost Analysis. Annual Review of Resource Economics, 4, 5573.
Bartik, Timothy J., Eberts, Randall W. & Huang, Wei-Jang(2010). The Kalamazoo Promise and Enrollment and Achievement Trends in Kalamazoo Public Schools. Upjohn Institute Conference Paper No. 15.
Bartik, Timothy J., Hershbein, Brad & Lachowska, Marta(2015). The Effects of the Kalamazoo Promise Scholarship on College Enrollment, Persistence, and Completion. Upjohn Institute Working Paper 15-229.
Bartik, Timothy J. & Lachowska, Marta (2013). The Short-Term Effects of the Kalamazoo Promise Scholarship on Student Outcomes. In Polachek, Solomon W. (Ed.), New Analyses of Worker Well-Being, Research in Labor Economics (Vol. 38, pp. 3776). Bingley: Emerald Group Publishing Limited.
Bartik, Timothy J. & Sotherland, Nathan(2016). Migration and Housing Price Effects of Place-Based College Scholarships. Upjohn Institute Working Paper 15-245.
Board of Trustees of the Federal. Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds (2015). The 2015 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds. Washington, DC: U.S. Government Publishing Office.
Bosworth, Barry P. & Burke, Kathleen(2014). Differential Mortality and Retirement Benefits in The Health and Retirement Study. Brookings Institution Research Paper.
Brand, Jennie E. & Xie, Yu (2010). Who Benefits Most from College? Evidence for Negative Selection in Heterogeneous Economic Returns to Higher Education. American Sociological Review, 75(2), 273302.
Card, David (1999). The Causal Effect of Education on Earnings. In Ashenfelter, Orley & Card, David (Eds.), Handbook of Labor Economics,Vol. 3A, pp. 18011863). Amsterdam: Elsevier.
Card, David (2001). Estimating the Return to Schooling: Progress on Some Persistent Econometric Problems. Econometrica, 69, 11271160.
Carneiro, Pedro, Heckman, James & Vytlacil, Edward (2011). Estimating Marginal Returns to Education. American Economic Review, 101(6), 27542781.
Carneiro, Pedro & Lee, Sokbae(2004). Comparative Advantage and Schooling. Mimeo.
Castleman, Benjamin L. & Long, Bridget Terry(forthcoming) Looking Beyond Enrollment: The Causal Effect of Need-Based Grants on College Access, Persistence, and Graduation. Journal of Labor Economics.
Cohodes, Sarah & Goodman, Joshua (2014). Merit Aid, College Quality, and College Completion: Massachusetts’ Adams Scholarship as an In-Kind Subsidy. American Economic Journal: Applied Economics, 6(4), 251285.
Conley, Timothy & Taber, Christopher (2011). Inference with ‘Difference-in-Differences’ with a Small Number of Policy Changes. Review of Economics and Statistics, 93(1), 113125.
Cornwell, Christopher M. & Mustard, David B. (2006). The Enrollment Effects of Merit-Based Financial Aid: Evidence from Georgia’s HOPE Program. Journal of Labor Economics, 24(4), 761786.
Cornwell, Christopher M. & Mustard, David B. (2007). Merit-Based College Scholarships and Car Sales. Education Finance and Policy, 2(2), 133151.
Currie, Janet & Moretti, Enrico (2003). Mother’s Education and the Intergenerational Transmission of Human Capital: Evidence from College Openings. Quarterly Journal of Economics, 118(4), 14951532.
Dynarski, Susan (2008). Building the Stock of College-Educated Labor. Journal of Human Resources, 43(3), 576610.
Goldrick-Rab, Sara, Kelchen, Robert, Harris, Douglas N. & Benson, James(2015). Reducing Income Inequality in Educational Attainment: Experimental Evidence on the Impact of Financial Aid on College Completion. University of Wisconsin Working Paper No. 1393-12.
Groen, Jeffrey A. (2004). The Effect of College Location on Migration of College-Educated Labor. Journal of Econometrics, 121(1–2), 125142.
Haider, Steven & Solon, Gary (2006). Life-Cycle Variation in the Association between Current and Lifetime Earnings. American Economic Review, 96(4), 13081320.
Hershbein, Brad(2013). A Second Look at Enrollment Changes After The Kalamazoo Promise. Upjohn Institute Working Paper No. 13-200.
Hoekstra, Mark (2009). The Effect of Attending the Flagship State University on Earnings: A Discontinuity-Based Approach. Review of Economics and Statistics, 91(4), 717724.
Kotlikoff, Laurence & Rapson, David (2007). Does It Pay, at the Margin, to Work and Save? Measuring Effective Marginal Taxes on Americans’ Labor Supply and Saving. In Tax Policy and the Economy, Volume 21 (pp. 83144). Cambridge, MA: National Bureau of Economic Research.
LeGower, Michael & Walsh, Randall(2014). Promise Scholarship Programs as Place-Making Policy: Evidence from School Enrollment and Housing Prices. NBER Working Paper No 20056.
Miller-Adams, Michelle (2009). The Power of a Promise: Education and Economic Renewal in Kalamazoo. Kalamazoo, MI: W.E. Upjohn Institute for Employment Research.
Moore, Mark A., Boardman, Anthony E., Vining, Aidan R., Weimer, David L. & Greenberg, David H. (2004). ‘Just Give Me A Number!’ Practical Values for the Social Discount Rate. Journal of Policy Analysis and Management, 23(4), 789812.
Moretti, Enrico(2003). Human Capital Externalities in Cities. NBER Working Paper No. 9641.
Moretti, Enrico (2004). Estimating the Social Return to Higher Education: Evidence from Longitudinal and Repeated Cross-Sectional Data. Journal of Econometrics, 121(1–2), 175212.
Moretti, Enrico (2012). The New Geography of Jobs. New York: Houghton Mifflin Harcourt.
Oreopoulos, Philip & Salvanes, Kjell (2011). Priceless: The Nonpecuniary Benefits of Schooling. Journal of Economic Perspectives, 25(1), 159184.
Scott-Clayton, Judith E.(2009). On Money and Motivation: A Quasi-Experimental Analysis of Financial Incentives for College Achievement. Unpublished manuscript.
Scott-Clayton, Judith E. (2011). On Money and Motivation: A Quasi-Experimental Analysis of Financial Incentives for College Achievement. Journal of Human Resources, 46(3), 614646.
Sjoquist, David L. & Winters, John V. (2014). State Merit-Based Financial Aid Programs and College Attainment. Journal of Regional Science, 55(3), 364390.
Willis, Robert & Rosen, Sherwin (1979). Education and Self-Selection. Journal of Political Economy, 87(5), S7S36 Part 2.
Zimmerman, Seth D. (2014). The Returns to College Admission for Academically Marginal Students. Journal of Labor Economics, 32(4), 711754.
Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

Journal of Benefit-Cost Analysis
  • ISSN: 2194-5888
  • EISSN: 2152-2812
  • URL: /core/journals/journal-of-benefit-cost-analysis
Please enter your name
Please enter a valid email address
Who would you like to send this to? *
×

Keywords

Type Description Title
UNKNOWN
Supplementary materials

Bartik supplementary material
Bartik supplementary material

 Unknown (14 KB)
14 KB

Metrics

Altmetric attention score