THE PRICE SENSITIVITY OF DEMAND FOR HIGHER EDUCATION AMONG NON-TRADITIONAL STUDENTS

This dissertation examines the price sensitivity of demand for higher education among non-traditional students in the United States. Chapter 1 discusses the issues related to the demand for higher education. It presents the recent trends and reviews the literature addressing these issues. A major conclusion that emerges from this chapter is that the price sensitivity of demand for higher education appears to depend on the source of the variation in price and the characteristics of the students who face the price change. The baseline estimate for the price sensitivity of demand is that a $1,000 (in year 2000 dollars) decrease in tuition costs should result in a 4 percentage-point increase in enrollment for the traditional 18- to 24-year-old student. Chapter 2 examines the price sensitivity of demand for higher education for military spouses resulting from variation in tuition due to military-mandated moves across states. The data suggest that a $1,000 (in year 2000 dollars) decrease in the cost of 2-year schools is associated with a 1--1.5 percentage-point increase in the probability of attending college. This estimate is less than half the previous estimates due to in-state tuition price differences faced by the civilian 18- to 24-year-old population on a percentage-point basis. However, this represents a 7--10 percent increase for this population, and the magnitude of this metric is in line with previous estimates. This suggests tuition assistance can be an effective means of increasing enrollment for military spouses, but other barriers to education for this population may also need to be addressed. Chapter 3 examines the impact of a change in the tax treatment of savings set aside for higher education by those who decide to suspend their education and enter the workforce. The taxation of these funds appears to have increased the rate at which these funds are included in an employee's initial contract and the quantity of funds allocated. These results are counterintuitive if the tax preference was the primary reason for the savings plan. However, these results suggest the rationale for the savings plan was to offer targeted additional compensation to recruits with greater negotiating power. Taxation of funds previously set aside did not appear to have a statistically significant impact on their utilization. Point estimates of the price sensitivity of demand from changes in the out-of-pocket costs for higher education induced by the taxation of these funds were small and often not statistically significant. The results from this dissertation show responses to changes in the net cost of college that differ by the source of price variation and the population experiencing them. This is consistent with the previous literature. This dissertation contributes to the literature by providing estimates for the price sensitivity of demand for higher education to previously understudied non-traditional students.

Essays on the Effects of Social Insurance for Disability

This dissertation examines how social insurance, family support and work capacity enhance individuals' economic well-being following significant health and income shocks. I first examine the extent to which the liquidity-enhancing effects of Worker's Compensation (WC) benefits outweigh the moral hazard costs. Analyzing administrative data from Oregon, I estimate a hazard model exploiting variation in the timing and size of a retroactive lump-sum WC payment to decompose the elasticity of claim duration with respect to benefits into the elasticity with respect to an increase in cash on hand, and a decrease in the opportunity cost of missing work. I find that the liquidity effect accounts for 60 to 65 percent of the increase in claim duration among lower-wage workers, but less than half of the increase for higher earners. Using the framework from Chetty (2008), I conclude that the insurance value of WC exceeds the distortionary cost, and increasing the benefit level could increase social welfare. Next, I investigate how government-provided disability insurance (DI) interacts with private transfers to disabled individuals from their grown children. Using the Health and Retirement Study, I estimate a fixed effects, difference in differences regression to compare transfers between DI recipients and two control groups: rejected applicants and a reweighted sample of disabled non-applicants. I find that DI reduces the probability of receiving a transfer by no more than 3 percentage points, or 10 percent. Additional analysis reveals that DI could increase the probability of receiving a transfer in cases where children had limited prior information about the disability, suggesting that DI could send a welfare-improving information signal. Finally, Zachary Morris and I examine how a functional assessment could complement medical evaluations in determining eligibility for disability benefits and in targeting return to work interventions. We analyze claimants' self-reported functional capacity in a survey of current DI beneficiaries to estimate the share of disability claimants able to do work-related activity. We estimate that 13 percent of current DI beneficiaries are capable of work-related activity. Furthermore, other characteristics of these higher-functioning beneficiaries are positively correlated with employment, making them an appropriate target for return to work interventions.