Democratization or Diversion? The Effect of Community Colleges on Educational Attainment

Throughout the late 1970s and the early 1980s, over 50% of all first-time first-year college students started in a junior college. Despite such a large role in higher education, we know relatively little about how well they serve their role of providing an education for all who want to attend college. Junior colleges affect educational attainment in two ways. First, the schools provide a place in higher education for those who might not have otherwise attended college, the democratization effect; however, they also draw away some students who might otherwise have attended a four-year college, the diversion effect. The democratization effect is nonnegative; however the effect of diversion on educational attainment is unclear, a priori, as some students might be better off starting in a four-year school. This paper attempts to sort out the overall impact of junior colleges on educational attainment. I use the natural experiment arising from variation in access to junior colleges across cities and states to address the problem of self-selection into types of colleges. This approach is implemented by an instrumental variables strategy in which distance to junior college and average state two-year college tuition are used to instrument for junior college attendance in an educational attainment equation. The results suggest that on net junior colleges increase total years of schooling, but do not change the likelihood of attaining a BA.