INTRODUCTION

However, the conventional wisdom about the economic value of schooling may not hold for every type of education or for every group of students. For individuals contemplating whether to continue their schooling and for policymakers wanting to know whether to invest public resources in particular types of schooling, the important question is not whether schooling, on the average, generates economic returns, but whether specific types of education benefit individuals and society. In particular, such information has been scarce in what I call the "sub-baccalaureate labor market"--the market for those individuals with at least a high school diploma, but less than a baccalaureate degree. This group includes those individuals who attend community colleges and technical institutes--the fastest-growing segment of higher education--as well as those who attend proprietary vocational schools. Some of these individuals receive sub-baccalaureate credentials--certificates and Associate degrees in either vocational areas or academic subjects--while a much larger number completes some education in these institutions and leaves without completing any credential. In addition, a large (and possibly increasing) fraction of students entering four-year colleges who leave without completing credentials (Grubb, 1989a), also compete in the sub-baccalaureate labor market. For this group, the well-known advantages of a higher education--that is, of a baccalaureate degree--cannot be assumed. Furthermore, there has been relatively little analysis of returns to sub-baccalaureate schooling because of the lack of detail in most data sets.[1]

In this monograph, therefore, I examine the returns to formal schooling, concentrating on the benefits of sub-baccalaureate credentials and of "some college"--the education individuals receive when they enter postsecondary programs but fail to complete credentials. I use a data set--the Survey of Income and Program Participation, or SIPP--that has more detail about sub-baccalaureate education than most other data sets. The SIPP also contains information about certain kinds of short-term job training, which I also analyze in this monograph. In some respects, as reviewed in the next section, the SIPP data is superior to other data sets that have been used to analyze education, though it suffers from certain deficiencies, too. The results presented here are, therefore, incomplete by themselves; they should be interpreted as part of a larger research effort in which several data sets, with different strengths and weaknesses, are analyzed in order to shed light on the workings of the sub-baccalaureate labor market.[2]

The important questions to pose about the sub-baccalaureate labor market are many and varied, and not all of them can be addressed with the SIPP data. Among the important questions addressed are the following:

• Are there economic benefits to community colleges and technical institutes? Critics of these institutions have charged that there are no returns (e.g., Brint & Karabel, 1989; Pincus, 1980)--a serious charge because an increasing fraction of students (and an especially large fraction of minority students) begin their postsecondary education in community colleges. Community colleges have been promoted by their advocates not only as a low-cost way of gaining access to the benefits of postsecondary education, but also as "second chance" institutions appropriate for older students, those making career changes, those in job training and welfare-to-work programs, and other nontraditional students who would not normally enroll in four-year institutions. If their benefits are low, or acutely varied, then the claims on behalf of these institutions must be tempered.
• Do the benefits of completing some college depend on receiving a credential--a certificate or an Associate degree--or does attending postsecondary education for short periods of time, but without receiving a credential, provide economic benefits? The importance of this question is--as we will see from the SIPP data itself--that many individuals enter postsecondary education (particularly community colleges) and leave without completing credentials (see also Grubb, 1989a). Particularly for community colleges, there is considerable disagreement about whether these noncompleters are really "dropouts" who have failed to attain the education goals they set for themselves; whether they are "experimenters" (Manski, 1989) who have entered community college as a low-cost way of finding out more about the advantages and disadvantages of higher education, but who have decided that postsecondary education is not for them; or whether they are really "completers" because they have finished just enough coursework to gain an entry-level job or a promotion. If individuals who fail to receive credentials are really "completers" in this sense, then we should expect some economic return to postsecondary education regardless of whether credentials are completed; but if such individuals are dropouts or experimenters, then we should not expect any return.
• If there are benefits to postsecondary education for those who do not complete credentials, are there economic returns to credentials themselves, above and beyond the returns to coursework completed? For example, is the return to a certificate--which in most institutions requires a year of full-time enrollment--greater than the return to one year of postsecondary education? Is the return to an Associate degree greater than the return to two years of postsecondary education? Such benefits attached to credentials are sometimes referred to as "sheepskin effects" (e.g., Kane & Rouse, 1993), since they are connected with the receipt of a credential, or sheepskin. Such a description is somewhat pejorative, implying that there may be unwarranted returns to credentials because employers mistakenly assume that the sheepskin signifies abilities which can just as readily be obtained by earning the equivalent number of credits.[3] I prefer to call any benefits associated with credentials "program effects" instead. The requirements for certificates and Associate degrees typically specify coherent programs with substantial coursework in a major field, supporting academic coursework, and (often though not always) general education requirements--while students accumulating credits without a credential are more likely to take a hodge-podge of unrelated coursework (Grubb, 1987). If coherent programs are more likely to generate productive capacities than are random courses, we ought to see substantial program effects.[4]
• Are there differences in return to schooling over the 1980s? From other data (particularly the Current Population Survey) and somewhat different analyses, it has become clear that the differentials associated with education increased during the 1980s (Grubb & Wilson, 1991; Levy & Murnane, 1992; Murphy & Welch, 1989). The SIPP data has been available since 1984, making it possible to analyze the returns to schooling for different years since then. In this monograph, I report results for the years 1984, 1987, and 1990, in order to see whether there has been any trend.
• Are there variations in the economic effects of postsecondary education for students of different ages? Many community college students are nontraditional students in the sense that they are older than average and are using the community college as a way of changing careers or re-entering the labor force after a period of time without employment--a practice common among mothers with young children or among those suffering chronic unemployment. This raises the question of whether the returns for these nontraditional students--who receive their credentials when they are older--are as high as they are for conventional students. If not, then the use of the community college as a "second chance" institution is suspect.
• What is the variation in returns to sub-baccalaureate credentials by field of study? As is well known, the returns to baccalaureate degrees vary substantially by field of study (e.g., Grubb 1992b, 1995c; Leslie & Brinkman, 1988; Rumberger & Thomas, 1993), and it seems reasonable that such variation exists for sub-baccalaureate credentials as well. Earlier work with the NLS72 data (Grubb, 1992a, 1995b) confirmed that some fields--especially health occupations and technical fields--have substantial returns, while most others have no benefits on the average. The implication of such variation for students is relatively clear, and they should be made aware of such differences among fields of study if they are to make fully informed career decisions. The implications for policy are less obvious, however, since there may be economic benefits to preparing individuals in certain fields despite the lack of economic returns to individuals.
• Are there differences in returns to education for different cohorts? There are various reasons why returns might vary by cohort, clarified in greater detail in a subsequent section. The SIPP data contains enough observations that it is possible to examine earning patterns for different age groups, or cohorts.

The final section summarizes the conclusions made possible from the SIPP data. Like earlier results for the sub-baccalaureate labor market, economic returns are quite variable: (1) the benefits vary substantially between men and women, among different credentials, and among fields of study; (2) the benefits of taking courses without completing credentials are quite uncertain, especially for women; and (3) the returns to different types of training are similarly variable (though with patterns suggesting that selection effects are largely responsible). One implication is that the simple faith in formal education as a route to higher earnings needs to be tempered, since economic returns vary substantially among different types of schooling.

[2] This research is part of a larger study supported by the National Center for Research in Vocational Education, undertaken with Jacob Klerman and Lynn Karoly of the RAND Corporation, to analyze three data sets: the SIPP, the National Longitudinal Study of the Class of 1972, and the National Longitudinal Survey of Youth. This research will lead to a review article of all the various studies about the economic benefits of sub-baccalaureate education.

[3] There is a long debate about whether the returns to schooling reflect real abilities, or whether they are signals of abilities that are not necessarily enhanced by education (e.g., Spence, 1974), or the irrational use of education as a credential for entry into certain employment (e.g., Rawlins & Ulman, 1974). For a recent review of this literature and the empirical tests based on it, see Grubb (1993b), corrected in Grubb (1995b). This paper does not present any tests of the signaling or credentialing hypotheses.

[4] There is, to be sure, a signaling view of program effects: that completion of a credential signals the persistence necessary to complete an externally imposed requirement.