a b s t r a c tOver the last two decades, for-profit colleges (FPCs) have substantially increased their share of the higher education market. One potential explanation is that FPC sector may be more responsive to labor market changes than public competitors. Using panel datasets of Associate's degree students, we examine the effects of changes in labor market conditions across various employment fields on enrollment and degree completion in related majors. The results indicate that enrollment and degree completion in the FPC sector is positively related to employment growth and wages in related occupations, while public institutions remain largely unresponsive. Heterogeneity analysis reveals that these relationships are similar across groups of students by gender and ethnicity. Furthermore, the results also indicate that students in public institutions are non-responsive to changes in labor markets associated with requiring an Associate's or Bachelor's degree.

The paper addresses the two-fold rise in teacher-student ratio in the American K-12 school system in the post-World War II period accompanied by the evidence of a decline in the relative quality of teachers. We develop a dynamic general equilibrium framework for analyzing the teacher quantity-quality trade-off and offer an explanation to the observed trends. Our OLG model features two stages of education: basic and advanced (college), the latter required of teachers. The cost of hiring teachers is influenced by the outside opportunities for college graduates in the production sector. We show that the latter factor strengthens in the process of endogenous growth and that it affects the optimal trade-off between quantity and quality of teachers such that the number of teachers hired will grow over time while their relative, but not the absolute, human capital attainment will fall. This is accompanied by increasing inequality, among the group of college educated workers in particular. We show that this effect, which we call the rising talent premium, applies whether teacher salaries are determined based on merit pay or, alternatively, by collective bargaining. Moreover, the salary compression characterizing the collective bargaining regime has an additional effect exacerbating the loss of the more talented workers by the teaching profession. Further, we analyze a comparative dynamics effect of exogenous skill-biased technological change which raises the college premium. We show that the effect is detrimental to the aggregate quality of teachers and to the quality of basic education. An important insight from this analysis is that in the process of human capital driven economic growth the rise in premium for high ability outpaces that for the average, whereby this effect is accelerated by technological change. This puts a downward pressure on the "real" quality of education inputs and therefore can create a negative feedback effect on human capital development as a factor of economic growth.

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Most researchers find that the non-teaching wage has a significant effect on teacher attrition. Surprisingly no study that estimates this effect actually uses former teachers" wages. The use of aggregate wage data can potentially cause upward bias coefficients due to selection issues. Using wages of former teachers in a simultaneous probit-tobit system of equations, the effect is estimated and found to be insignificant. The results indicate that higher teaching wages and student teaching significantly lower attrition while being attacked or threatened during the previous school year and whether the teacher lives in a household with income above $40,000 significantly increase attrition.