Expanding the Supply of SCPs: Who Would Benefit and Why?

pursuing. The program might be socially valuable, as is the case of elementary school teaching and social work, or provide the student with nonpecuniary returns. Rather, the analysis seeks to show that, for students interested in raising their lifetime income, some programs are clearly better than others. It also seeks to alert the regulator of the great variation in SCP returns, and to provide him with data to make decisions (chapter 5).

All in all, despite the large disparities across HEI types and fields, the estimates of net returns in Chile and Colombia indicate that SCPs can offer larger economic benefits relative to bachelor’s degrees. Among the institutions granting SCP degrees, universities are not always the highest return option, as other HEI types offer higher returns depending on the field. In light of the SCP stigma in the region and the funding differences between bachelor’s programs and SCPs (see chapter 1), these findings suggest that families, students, and policy makers might be overlooking the economic benefits of SCPs.

Expanding the Supply of SCPs: Who Would Benefit and Why?

LAC has witnessed efforts to expand SCP supply over the past two decades.18 For instance, the number of SCPs in Colombia and Chile grew by approximately 3 and 2 percent a year, respectively, between the early 2000s and the late 2010s (see chapter 3).19 Are students more likely to pursue SCPs when their supply is expanded? Do students benefit from an SCP relative to not pursuing higher education at all? Do they benefit from an SCP relative to a bachelor’s program? Answering these questions is critical for policy makers interested in expanding the supply of SCPs.

As it turns out, the answer to these questions largely depends on students’ fallback options—what they would choose if SCPs were not available. When SCPs become available, there are two types of students: (a) students diverting from enrolling in a bachelor’s program and instead enrolling in an SCP, and (b) students entering the higher education system by enrolling in an SCP. Students in these groups likely differ in their characteristics, preferences, and previous skills, as well as in the gains or losses they would obtain from the SCP. Identifying students in categories (a) and (b) is ultimately a conceptual and policy relevant challenge.

High school graduates face an important decision: whether to enroll in higher education and, in the case of enrolling, whether to choose a bachelor’s program or an SCP. Although some students might have strong preferences for one option, there is no prior reason to think that one alternative is better than the other for all students. While students who do not attend higher education enter the labor market earlier than those who pursue higher education, some of them might benefit from delaying work and enrolling in an SCP. For others, choosing a bachelor’s program rather than an SCP might harm their labor market trajectories if they are more suited to acquiring practical skills in an SCP rather than traditional, academic skills in a bachelor’s program.

Colombia provides a unique setting to analyze these higher education choices and their labor market effects. As described in box 2.1, administrative data allow the researcher to follow high school graduates, observe their higher education trajectories,20 and, for those who graduate from higher education, observe their formal market employment and earnings. Exploiting these data, Ferreyra, Galindo, and Urzúa (2020) determine the effect of the enrollment choices made by the 2005 cohort of high school graduates on their formal employment probability and average earnings in 2013. Estimating this effect is not straightforward because of self-selection: high school graduates choosing to enroll in an SCP might be different from those making other choices, in observed (for example, family income) and unobserved (for example, perseverance) characteristics. A meaningful comparison must take these differences into account.

To gain traction on the problem, the authors focus on a variable that does not pertain to the student herself but can help explain her choices—namely, the availability of SCPs in her municipality. This is because having an SCP in her municipality makes it easier—less costly—for her to enroll in one. Figure 2.8 confirms this intuition. It examines the average choices of students from the 2005 high school cohort who lived in a municipality with an SCP relative to the choices of students living in municipalities without an SCP. As expected, the former group was more likely to enroll in these programs (10.4 versus 7.3 percent; see the orange bars in figure 2.8). In other words, SCP availability is one of the determinants of students’ enrollment choices.

Equipped with this evidence, consider the following question: Which students would respond to the opening of an institution offering SCPs within a 10-kilometer radius from their home municipality? To answer it, consider first the baseline scenario, when such institution is not available. In this case, students can select among the following three options: not enrolling in higher education, enrolling in an SCP (outside the 10-kilometer radius), or enrolling in a bachelor’s program. After the institution offering SCPs opens within a 10-kilometer radius, students can select the same options as before but can also enroll in an SCP at the new institution. What will they do? By addressing the self-selection issue through SCP availability and modeling student responses as grounded on basic economic principles, Ferreyra, Galindo, and Urzúa (2020) show that SCP enrollment would increase, mostly as a result of students diverging from bachelor’s degrees as opposed to students entering higher education. In other words, SCP availability would make some students (the “switchers”) switch from a bachelor’s program to an SCP. Moreover, the switchers would be mostly males poorly prepared for higher education, coming from disadvantaged households in small or medium-size municipalities. More important for this chapter, had the switchers persisted in their choice of a bachelor’s program rather than switching to an SCP, their formal employment rate and salaries would have been lower than with the SCP. In other words, SCPs are a better match for those students—formally, they experience a positive SCP treatment effect—as the availability of SCPs gives them access to better, more productive labor market matches.