Returns to two-year degrees and certificates in Texas
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Community college credentials are an increasingly important part of post-secondary education in the United States. Two-year institutions have been receiving additional attention from students, researchers and policy makers, yet it is still not clear how much labor market value these degrees have. Previous studies have been limited in their ability to differentiate between types of community college credentials (CCCs), and been unable to limit selection bias. In this study, I estimate the value of four different kinds of CCCs in the Texas labor market, paying particular attention to gender-based gaps in wage premiums. I then estimate the value of these degrees using an Instrumental Variable strategy which allows for the estimation of the causal effect of CCCs on earnings. I find that considering only a single category of community college credentials masks variation in the value of these degrees, namely the high value of Applied Associate’s degrees. Results suggest that even after accounting for the self-selection of individuals into higher education, Applied Associate’s degrees significantly increase early career earnings.