RESEARCH | respinoza

WORKING PAPERS

> Unintended Consequences of Free College: Self-Selection into the Teaching Profession (with Rosa Castro-Zarzur and Miguel Sarsoza)

Abstract: Teacher quality is one of the most relevant factors influencing student learning. However, attracting and retaining skilled people to the teaching profession is challenging. In this paper, we study how making college tuition-free affects the pool of students
pursuing a teaching career. We exploit the conjunction of two tuition-financing policies implemented in Chile: a scholarship introduced in 2011 for teaching majors, and a massive 2016 reform that made college tuition-free for students from households in the bottom 50% of the income distribution. We use the programs’ differences in timing and eligibility criteria to study the effects free college had on the self-selection of students into teaching majors. We find that free college decreased the relative returns to pursuing a teaching career, making it substantially less popular among relatively poor high performing students who now self-select into degrees with higher returns. We find that the reform reduced the academic qualifications of the pool of students entering the
teaching programs, which can negatively affect long-term teacher quality.

> Endogenous Market Formation: Theory and Evidence from Chilean College Admission (with Soohyung Lee and Hector Lopez).

Abstract: Policy makers around the world have adopted market-design-inspired centralized matching systems for assigning students to public schools. However, the question of whether policy intervention is necessary for such adoptions has been little studied. Examining a setting with application costs and heterogeneity in college quality, we show that sizable application costs and small heterogeneity in college quality may lead to voluntary transition to a centralized matching system. Using the 2012 system change in Chile, we demonstrate the plausibility of our theoretical setting and show that the enlarged pool of colleges in the centralized admission is welfare-improving, particularly for those students facing high application costs.

> Loans for College: Strategic Pricing and Externalities

Abstract: Student loans have proven to be effective in increasing college enrollment, especially among low-income students. Yet loans' ability to improve student welfare depends on the pricing response of schools. If schools exert some degree of market power and set tuition strategically, they may react to loans by raising tuition in order to capture some portion of the aid. This generates a negative externality on ineligible students, who have to pay higher tuition fees than if loans did not exist. This paper studies this unintended consequence of student loans, and provides an estimate of the causal effect of loans on tuition. First, I present a simple theoretical framework to understand the mechanisms through which loans can affect student welfare. Then, I develop an econometric model of supply and demand for higher education, and study this phenomenon in the context of a student loan program that was implemented in Chile in 2006. Using a rich dataset containing pre and post individual-level data on student applications to college, I structurally estimate the effect of loans on the price-elasticity of demand for different schools. Then, I perform a counterfactual analysis to assess the impact of loans on schools' pricing strategies. I find that, on average, schools raise tuition by 6% in response to loans, which generates an average externality of US$178 per student per year.

> The Causal Effect of Skills: An International Study ( with Miguel Sarzosa, Sergio Urzua and Koji Miyamoto)

Background paper for the OECD International Skills Resport, 2014

Abstract: This paper analyses the causal effect of cognitive and socio-emotional skills on several outcomes including social behaviour, health and job market outcomes in five different countries. The estimation relies on a structural factor model that allows us to account for the inherent measurement error in test scores and also for the influence of the family and the environment on the measurements of latent skills. Using longitudinal surveys in Norway, North Korea, United States, United Kingdom and New Zealand we found a non-negligible effect of skills on a set of relevant outcomes. This paper contributes in understanding the social and economic effects of several dimensions of skills and the way outcome-improving polices should be shaped

PUBLICATIONS

> The (Un)expected Economic Consequences of the Recent Expansion of Higher Education in Latin America (Ricardo Espinoza and Sergio Urzua).

Latin America Policy Journal, Volume 7, Spring 2018

> On The Inappropriateness of Levying a Graduate Tax to Finance a Tuition-Free Higher Education (Ricardo Espinoza and Sergio Urzua). [In Spanish]

Economía y Política 2(2), 77-106

> The Economic Consequences of Implementing Tuition Free Tertiary Education in Chile (Ricardo Espinoza and Sergio Urzua) [Spanish Version here]

Revista de Educación, 370. October-December 2015, pp. 10-37

> Identification and Reduction of Non-Technical Competency Gaps of Engineering Graduates in Chile (Ricardo Espinoza, Richard Leboeuf and Matías Pizarro)

International Journal of Engineering Education, 2013, 29(2): 426-438

> Cambios demográficos y estructura salarial (Ricardo Espinoza and Ricardo Paredes). [In Spanish]

El Trimestre Económico, vol. LXXVII (2), núm. 306, abril-junio.

BOOK CHAPTERS