Essays on the Industrial Organization of Higher Education

Abstract

This dissertation consists of three chapters on the industrial organization of higher education. Chapter 1 studies the impacts of mergers and acquisitions on students’ outcomes. We explore a series of acquisitions of private higher education institutions in Brazil to conduct an ex-post analysis of the effects of mergers. Using detailed administrative data on students and institutions, we estimate the impacts of mergers using a matched difference-in-differences design. We find that, upon merging, institutions increase tuition prices. The effect on teaching quality is heterogeneous over time, but we find evidence that it is negative in the long run. We also document that dropout rates increase. Finally, our results suggest that the observed effects are not solely a consequence of an increase in market power.Chapter 2 estimates the effects of a credit crunch in student loans on firm behavior. We explore the Brazilian context, where the major federal program of subsidized student loans experienced a sharp contraction in 2015. We estimate the impacts of the credit crunch using an event study design. We find that tuition prices decrease after the credit crunch. We also observe an increase in price discrimination in more exposed institutions, as they offer more loans and tuition discounts to their students. Lastly, we find a noticeable increase in the racial and income gaps after the reduction in federal student loans. In Chapter 3, Christiane Szerman and I study the incentives of for-profit higher education institutions. We explore the expansion of the main federal student loan program in Brazil. Our difference-in-differences approach indicates that this expansion is associated with an increase in enrollments for high-quality programs. At the same time, low-quality programs invest more in quality in response to the reform. Lastly, we develop a theoretical model of demand and supply for higher education to understand how quality-conditional student loan programs affect the decisions of institutions. Importantly, the model confirms that the availability of student loans raises prices in high-quality eligible programs. Moreover, it highlights that, because student loans are quality-conditional, institutions are incentivized to increase quality investment.