Published on 2015/01/05

What Are the Economic Returns to Certificates?

The EvoLLLution | What Are the Economic Returns to Certificates?
Local context, student goals and earnings must all be taken into account when determining the overall value of an educational program.

Certificates (non-degree awards offered at community, technical and for-profit colleges that typically require less time to complete than associate degrees) have assumed an increasingly important role in today’s postsecondary landscape.

The rapid growth and heightened support for certificate programs is related both to their emphasis on vocational training and their higher completion rates relative to associate degree programs. Certificate programs at community colleges have disproportionately enrolled many of the lowest performing students and low-income adults, providing a pathway to economic opportunity for these populations who have been under-represented in higher education and are most at risk of being left behind by ongoing changes in the labor market. Yet, until recently, relatively little was known about the economic benefits of certificate programs and how such benefits vary by field of study.

A recent study conducted at the Center for Analysis of Postsecondary Education and Employment addressed this research gap using detailed student-level information from matched college transcript and employment data in two states. We compared students’ post-college earnings with their pre-college earnings, and then compare the size of this change among students who received a certificate and those who left college without earning any credential. We found a positive impact of attaining a long-term certificate (requiring one year of full-time study or more to complete) on an individual’s probability of employment and earnings conditional on employment; in contrast, we only observed consistent positive impacts on employment for short-term certificates (requiring less than one year of full-time study to complete). The findings on short-term certificates are in contrast to results from some recent research conducted in other states (e.g. the one conducted by Dadgar and Trimble in Washington state) over different time periods that found a lack of benefits for short-term certificates. These between-state differences in returns to certificates may be driven by state variations in the specific types of certificate programs offered, program design, institutional context and the local labor market. These differences between states underscore the importance of evaluating program benefits relative to the institutional context and the local labor market rather than solely relying on national averages or evidence from other states.

We also find a large degree of variation across fields of study, where the largest positive returns are to nursing and fields related to allied health for long-term certificates in both states. Yet, even within the generally lucrative allied health field of study, there are disparities across programs. Programs that are closely aligned to the labor market and prepare graduates for specific jobs—such as the dental assisting programs—seem to lead to better economic opportunities than programs that prepare students more generally for the labor force, such as the health sciences program. These findings suggest that colleges and college systems should encourage certificate programs to build direct links to local employers and careers.

Finally, an in-depth analysis of the industry of employment before and after college enrollment indicates that many adult learners use certificates, particularly short-term certificates, to switch to a new industry of employment. In particular, during the years of the economic recession (2008-2010), certificate programs enrolled a large proportion of students working in manufacturing before college enrollment. The manufacturing industry, despite its high average pay, was volatile during the recession, with many employees threatened with layoffs. These individuals might enroll in a certificate program in order to gain entry into an industry that has lower average earnings but that offers other benefits, such as increased probability of employment, stability or work satisfaction. As a result, certificate programs may confer other benefits to graduates without necessarily being able to boost students’ earnings.

Our results point to the importance of including multiple measures to evaluate the benefits of a certificate program, rather than merely evaluating its impact on overall earnings. Policies that tie funding or other benefits to the earnings of program graduates alone may unfairly penalize programs that provide implicit economic benefits to students or that improve students’ lives in other important ways.

To read the paper referenced in this article, please click here.

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