Three Essays on Student Achievement, College Resources, and School Efficiency

Abstract

This dissertation investigates issues related to three student outcomes, college resources, and school efficiency. The two related research in Chapters 1 and 2 explore the influence of student background characteristics and school resources on the college student outcomes of attendance, completion, and persistence. Using a merged dataset of the National Longitudinal Survey of the Youth 1979 Geocode version and the Integrated Postsecondary Education System, the omitted variable bias common in standard education production function approach is mitigated as well as made available several resource indicators that both enabled a comprehensive analysis of the impact of school resources on student persistence and completion and the application of the multiple indicator solution variant of the instrumental variables methodology to account for both time-constant and time-varying unobserved heterogeneity. Overall, the empirical findings reveal that ability, gender, marital status, and precollege preparation are strong predictors of student success in college, while greater school resources matter only for low-resource institutions with the exception of financial aid spending. More precisely, the estimation results suggest that a 10 percent increase in financial aid spending can raise student completion and persistence across different spending levels by 0.8-2.5 and 0.6-3.4 percentage points, respectively. Finally in Chapter 3, I evaluate the cost efficiency of American colleges and universities as well as assess their plausible responses when economic shocks, such as those in 2008 and the fragility of the global economy that lingered thereafter, adversely impact their revenue structure using a one-step, panel data variant of the stochastic frontier analysis methodology. The results suggest that the US higher education sector is about 77 percent cost-efficient, implying that schools can maintain their output levels while absorbing budget cuts. Further investigation also imply that failure to account for school quality in cost analyses misattributes the impact of quality on costs onto institutional control, while inefficiency effects are influenced by colleges’ student, staff, and cost share characteristics. More precisely, cost inefficiency falls with increases in the instruction cost share and generally rises with the shares of part-time students, undergraduate students aged 25 and over, female instructors, professors, nonwhite staff, and research spending.