Why has for-profit colleges’ share of higher education expanded so rapidly? Estimating the responsiveness to labor market changes

• Published in: Economics of education review 2015-04, Vol.45, p.53-63
• Main Authors: Gilpin, Gregory A., Saunders, Joseph, Stoddard, Christiana
• Format: Article
• Language: English
• Subjects: Community colleges; Degree completion; Enrollment; For-profit colleges
• ISSN: 0272-7757; 1873-7382
• DOI: 10.1016/j.econedurev.2014.11.004

•FPCs have substantially increased their share of the higher education market.•Empirical evaluation of changes in labor markets on enrollment and degree completion.•FPCs enrollment and degree completions positively related to labor market conditions.•CCs enrollment and degree completions are non-responsive to labor markets associated with AS or BA degrees.•Relationships are similar across groups of students by gender and ethnicity. Over the last two decades, for-profit colleges (FPCs) have substantially increased their share of the higher education market. One potential explanation is that FPC sector may be more responsive to labor market changes than public competitors. Using panel datasets of Associate's degree students, we examine the effects of changes in labor market conditions across various employment fields on enrollment and degree completion in related majors. The results indicate that enrollment and degree completion in the FPC sector is positively related to employment growth and wages in related occupations, while public institutions remain largely unresponsive. Heterogeneity analysis reveals that these relationships are similar across groups of students by gender and ethnicity. Furthermore, the results also indicate that students in public institutions are non-responsive to changes in labor markets associated with requiring an Associate's or Bachelor's degree.