A Pathway to Mobility: Shifting Low-Income Students to Higher-Quality Degrees

Résumé: Earnings inequality is primarily growing within education groups, especially among college graduates. Observed returns to a bachelor’s (BA) degree vary substantially by college. Disadvantaged students are concentrated at schools with lower payoffs, undermining the potential of college to act as an engine of income mobility. We experimentally test a program to shift low-income students toward higher quality degrees. Students randomly offered a guarantee of four years of free tuition at the flagship University of Michigan-Ann Arbor were about twice as likely to earn a BA from a highly selective college. LATE estimates indicate that those induced to attend the flagship are 65 percentage points (pp) more likely to earn a BA of such high quality, relative to a control complier mean of 4 percent. The offer increased four-year BA completion by 4 pp, with a 23 pp increase implied for compliers. After six years, the treatment and control groups are equally likely to have a BA. We find no decrease in the likelihood of graduating with a STEM degree. The shifts in degree quality imply large increases in income mobility. LATE estimates predict a 31 percent increase in earnings at age 30 for those induced to attend a higher quality college.