Sebastián Otero, PhD student in economics at Stanford University
Returns to Higher Education: The Case of Brazil
Nano Barahona, Cauê Dobbin, and Sebastián Otero
Since the 2000s, many higher education systems in Latin America have undergone a massive, fast-paced, market-driven expansion. The private nature of this expansion has raised concerns about program quality. The question of whether equity gains in access come at the expense of program quality is central to education policy. However, to date, there is little causal evidence on the labor market returns to college education and how these vary by degree quality. We address this question in the context of Brazil, where enrollment in tertiary education rose from 1.8 million students in the 2000 to 6.5 million by 2013. To overcome selection concerns, we exploit two natural experiments that randomly increased the scores of some students on the Brazilian college entrance exam (ENEM) starting in 2009. Using rich administrative data comprising the universe of exam takers, we find striking differences in the exam scores of affected groups, which translate into subsequent differences in the rates of entrance to higher education. We will use these results to estimate the distribution of labor market returns to postsecondary education, as well as the contribution of degree quality to wage inequality in Brazil. This will enable us to conclude whether a market-oriented expansion in higher education can increase coverage while providing valuable degrees.