Isolating the Causal Impact of Community College Enrollment on Educational Attainment and Labor Market Outcomes in Texas

In this paper, we attempt to isolate the causal impact of enrolling in a community college upon educational attainment and labor market outcomes in the state of Texas. Using administrative data on all public high school graduates from the state, we use both matching and IV methods to investigate the impact of community college enrollment on the probability of obtaining a bachelor's degree. Both methods indicate that enrolling in a community college over a university decreases the probability of completing a bachelor's degree by approximately 26%. Using data from the Texas Workforce Commission, we go on to look at the labor market return to initial college choice. Using IV to deal with the selection issue, we find that initiating one's academic career in a community college instead of a university lowers one's earnings by approximately $6800 per annum for young adults just completing college. After conditioning upon completion of a baccalaureate degree, this estimate falls substantially, and becomes statistically indistinguishable from zero for one of three favored specifications. Our results are quite sensitive to the exclusion of relevant information about the local labor market, which casts doubt upon the results of some past studies using distance IVs to look at labor market outcomes.