The Declining Payoff From Black Colleges

I mentioned in a recent post that students who choose to attend a historically black college instead of a more selective college may be hurting their future earnings prospects. There’s more evidence for this finding than I knew. A 2007 study, by Roland Fryer and Michael Greenstone, came to a similar conclusion.

The study found that historically black colleges and universities — often known as H.B.C.U.’s — lifted the pay of their graduates in the 1970s relative to their attending other colleges, all else equal, but that these colleges now bring a hefty wage penalty, on average, for their graduates. One possible reason is that traditionally white institutions began doing a better job of educating their black students in recent years, according to the paper.

“On the positive side,” Mr. Fryer and Mr. Greenstone wrote, “H.B.C.U. attendees became relatively more likely to be engaged in social, political, and philanthropic activities.”

I asked Mr. Fryer and Mr. Greenstone whether the wage penalty could partly be a reflection of the fact that graduates of historically black colleges were more likely to take jobs in the nonprofit and public sectors. “The surprising result,” Mr. Greenstone replied, “is that the findings hold even after controlling for people’s occupation.”

He also wrote, by e-mail:

Another surprising finding is that the high school accomplishments (e.g., SAT scores, G.P.A., etc.) of H.B.C.U. attendees improved between the 1970s and 1990s, relative to the credentials of African-American students attending traditionally white institutions. Thus, the most qualified African-Americans were increasingly choosing H.B.C.U.’s at the same time that these schools appear to have fallen behind in producing skills that are rewarded in the labor market.

Of course, wages are just one measure of a student’s satisfaction with a school. However, at a minimum, this finding can help high school students make a more informed decision about where to attend college, which is one of the most expensive investments people make in themselves.

Ideally, there would be data that allowed us to compare how much students learned at different colleges. But colleges, of all kinds, generally refuse to release the results of the tests that aim to measure learning. We’re therefore left with comparing colleges based on the credentials of incoming freshmen (as U.S. News does), on graduation rates and on studies like the Fryer-Greenstone one.

The abstract of the paper follows:

Until the 1960s, Historically Black Colleges and Universities (H.B.C.U.’s) were practically the only institutions of higher learning open to Blacks in the US. Using nationally representative data files from 1970s and 1990s college attendees, we find that in the 1970s H.B.C.U. matriculation was associated with higher wages and an increased probability of graduation, relative to attending a Traditionally White Institution (T.W.I.).

By the 1990s, however, there is a wage penalty, resulting in a 20% decline in the relative wages of H.B.C.U. graduates between the two decades. We also analyze the College and Beyond’s 1976 and 1989 samples of matriculates which allows us to focus on two of the most elite H.B.C.U.’s. Between the 1970s and 1990s, H.B.C.U. students report statistically significant declines in the proportion that would choose the same college again, preparation for getting along with other racial groups, and development of leadership skills, relative to black students in T.W.I.’s. On the positive side, H.B.C.U. attendees became relatively more likely to be engaged in social, political, and philanthropic activities.

The data provide modest support for the possibility that H.B.C.U.s’ relative decline in wages is partially due to improvements in T.W.I.s’ effectiveness at educating blacks. The data contradict a number of other intuitive explanations, including relative decline in pre-college credentials (e.g., SAT scores) of students attending H.B.C.U.’s and expenditures per student at H.B.C.U.’s.