Community Colleges and Upward Mobilit

Two-year community colleges enroll nearly half of college entrants in the United States. These local institutions extend higher education to new populations but may also divert college-bound students from 4-year entry, casting ambiguity over their contributions to upward mobility. This paper investigates the consequences of expanding access to 2-year colleges in light of this tradeoff. I combine linked administrative data with a new instrumental variables (IV) approach that nonparametrically identifies causal effects along multiple treatment margins, unlocking a decomposition of the overall effects of 2-year access into separate causal impacts on new 2-year entrants who otherwise would have not enrolled in college versus those diverted from 4-year entry. I implement the approach using instrumental variation in high school students' proximities to 2-year and 4-year colleges conditional on neighborhood quality, urbanization, and local labor market fixed effects, validating that this variation drives initial enrollment choices while remaining balanced across excluded student ability measures that strongly predict choices and outcomes. The results of this IV approach offer four main conclusions. First, expanding access to 2-year colleges boosts the educational attainment and earnings of new 2-year entrants on net. Second, these net effects shroud opposing impacts along the two enrollment margins: roughly one third of these 2-year entrants are diverted from 4-year entry and earn fewer bachelor's degrees as a result, while the other two thirds would not have otherwise attended college and reap significant gains in educational attainment and earnings. Third, stratifying by demographics reveals that women drive these results with effects of larger magnitude along both margins compared to men, while 2-year access significantly boosts the upward earnings mobility of low-income students with little offsetting diversion. Finally, stratifying the effects of 2-year entry across the range of 2-year college proximity suggests that the net gains to marginal students do not diminish with further expansion of 2-year access.