Why Have For-Profit Colleges Expanded so Rapidly? The Role of Labor Market Changes in Student Enrollment and Degree Completion at Two-Year Colleges

Abstract

This paper investigates the six-fold increase in student enrollment and three-fold increase in degree completions at for-profit colleges over the last two decades. In particular, we examine the hypothesis that for-profit colleges have more flexibility to respond to market changes, attracting growing shares of students. Using a panel dataset, we examine the effects of local labor market conditions for broad occupation groups on student enrollment and degree completion in related majors. We find that the share of majors at for-profit colleges is related to employment growth and wages in related occupations, but the effects are negligible at community colleges.