Research

Abstract: Do future schooling opportunities shape current educational decisions? In this paper, I exploit a large expansion in the supply of free technical and traditional higher education institutions (HEI) in Brazil to assess whether exposure to new HEIs shifted educational trajectories and pre-college human capital accumulation for local teenagers. Using a novel dataset on HEI roll-out combined with rich administrative data, I estimate the effect of receiving an HEI on local students' pre-college outcomes through a staggered differences-in-differences design. I find that the arrival of an HEI meaningfully increases test scores in middle school and high school graduation, and reduces child labor: students exposed to new HEIs are 4% more likely to graduate from high school and 4.5% less likely to report working outside the household in 9th grade. To rationalize how the expansion of higher education affects secondary schooling decisions, even in a setting where high school is free and readily available, I develop a simple framework that illustrates the roles of tertiary schooling costs, the wage premium associated with a college degree, and the probability of accessing that premium (through increased likelihood of attending higher education) in shaping students' early educational decisions. While decreases in cost will unambiguously increase high school graduation, changes in the probability of accessing tertiary education will only shift earlier educational decisions in places where tertiary returns are sizeable. I find that students in treated municipalities are 9% more likely to enroll in a federal HEI following the policy, but, consistent with the framework, high school graduation increases only for treated students in municipalities above the 40th percentile of the returns-to-higher-education distribution. High college premiums, coupled with an increase in the probability of accessing higher education, are the key mechanisms by which future educational opportunities raise early human capital accumulation — a finding with particular relevance for low- and middle-income countries where standalone returns to high school are modest relative to the college premium.