2.1 Sources of Information

To provide a more meaningful estimation of the economic impact of SCPs relative to the alternatives, the chapter further compares net lifetime earnings for graduates of bachelor’s programs and SCPs. This analysis is carried out using administrative data from higher education programs in Chile and Colombia, accounting for tuition costs as well as forgone earnings. In this way, the text assesses the relative disparities in net returns from a long-term perspective. The rich dataset used to conduct this exercise as well as others in this chapter is described in box 2.1.

Of course, any analysis of the economic benefits associated with different higher education degrees would be incomplete without an examination of the decision that leads students to enroll in (and eventually graduate from) different higher education programs. For example, students could choose between SCPs and bachelor’s programs, taking into account their characteristics, local labor

Box 2.1 Sources of Information

The analysis in this chapter uses several sources of information. The estimation of the economic returns to higher education programs in the region uses the unharmonized household surveys from the Socio-Economic Database for Latin America and the Caribbean (the Center for Distributive, Labor and Social Studies and the World Bank), which are described in chapter 1.

In addition, the analysis takes advantage of administrative sources of information. Data from the Ministry of Education containing student-level records for cohorts of graduates from higher education institutions (HEIs) (age, gender, degree and HEI, graduation date, and duration). A second source is the Higher Education Information Service data set, which contains information on 46,893 academic programs in 208 HEIs from 2010 to 2020, including the formal duration of the program, tuition costs, and location (municipality). The third source is www.mifuturo.cl, a website of the Ministry of Education that provides information on average labor income four years after graduation for 1,574 higher education programs including shortcycle programs.

For Colombia, the primary data source is the Labor Observatory for Education (Observatorio Laboral para la Educación) of the Ministry of Education. This is a longitudinal, individual-level data set containing information on higher education graduates. The data set includes graduation year, higher education degree earned, HEI attended, location (municipality) of work, and base income used for contributions for employees in the formal sector. This is further augmented with information at the program level from the National Higher Education Information System (Sistema Nacional de Informacion de Educacion Superior), which includes duration and tuition costs for approximately 5,400 higher education programs. On top of this, information was gathered from the Observatorio de la Universidad Colombiana, an independent organization that collects tuition from individual HEIs in the country. Thus, unlike previous studies, this chapter does not rely on tuition

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Box 2.1 Sources of Information (continued)

aggregated by institution type. Finally, the Ministry of National Education (Sistema de Prevención y Atención de la Deserción en las Instituciones de Educación Superior) records student-level higher education trajectories.

Despite the advantages of using large administrative data sets, it is important to acknowledge that the analysis is subject to data limitations. First, the timing of outcomes (earnings observed 1, 2, 4, or 10 years after graduation) can alter the conclusions. Specifically, programs with high returns in the short run might look worse over longer time horizons. Further, academic and labor market outcomes often paint quite different pictures (MacLeod et al. 2017). Thus, future efforts should complement this analysis.

market conditions, and the availability of higher education institutions (HEIs) offering these programs, among other factors. This self-selection might limit the scope and interpretation of conventional returns, particularly those obtained from the direct comparison of labor market outcomes across groups of individuals with different degrees. Formally, the simple contrast of averages (for example, average earnings or employment levels) cannot be interpreted as the causal impact of education on a specific outcome.

By exploiting the variation in local availability of SCPs in Colombia and using a conceptual framework grounded in individuals’ rational responses, this chapter addresses these concerns and estimates the treatment effect of SCPs on employment and salary. The effect is not the same for all students who pursue an SCP, but rather varies depending on their fallback option—namely, what they would have chosen (whether not enrolling in higher education, or enrolling in a bachelor’s program) had they not enrolled in the SCP.

The chapter also presents new evidence on the contribution of SCPs to graduates’ initial earnings. In other words, it quantifies program-level (institutiondegree-major) contributions to early labor market outcomes. This is done using rich data from Colombia and value-added models. As such, the text provides a different perspective on the economic benefits of SCPs.

Finally, the chapter characterizes the labor demand for individuals with higher education degrees. To this end, it exploits information on online vacancies in Argentina, Chile, Colombia, Mexico, and Peru. Each posting records job characteristics including the required educational qualifications, firm location, and economic sector.

The chapter’s main findings can be summarized as follows:

• On average, the Mincerian returns to bachelor’s programs are substantially higher than those to SCPs. However, while the returns to bachelor’s degrees in LAC have been decreasing over time, the returns to SCPs have risen for more than half of LAC countries. Relative to the alternative of an incomplete bachelor’s degree, SCPs emerge as a superior alternative in most of the countries.