Richard D. Marcus

Tuition and U.S. Private College Characteristics: The Hedonic Approach.

Abstract Tuition at private colleges in the United States for the academic year 1982–1983 were statistically very closely related to quality characteristics associated with those colleges. Reduced form hedonic regressions reveal the equilibrium marginal tuition revenue estimates for over twenty important measures of quality, including faculty-student ratios, library size, and the percentage of the faculty holding Ph.D. degrees. These findings show that private college tuition responds in economically sensible ways to changes in public tuition, and changes in the quantity and quality of the faculties, facilities, and student bodies at private colleges.

Measuring the Rate of Return to Interrupted Schooling

The most widely followed technique to estimate the rate of return to a year of schooling was provided by Mincer (1974). This paper extends Mincers semilog wage regression method to include those who interrupted their schooling with years of work. Schooling and the duration of the interruption interact to create nonlinearities in the rate of return to schooling. The proposed method is then applied to both Vietnam era G.I. students and civilian interrupters. It is found that interrupters earn substantially the same rate of return as the rate of return to uninterrupted schooling at the same level of schooling. G.I. students earned slightly higher rates of return to their interrupted schooling, but their accumulated work experience was not valued highly in the labor market.

Freshmen Retention Rates at U.S. Private Colleges: Results from Aggregate Data

The declining pool of new high school graduates has led colleges to begin programs to attract a new clientele of older students and encouraged colleges to consider methods to increase the retention rates of the already enrolled students. Using data from published college guide books, this paper investigates a sample of all private U.S. four-year colleges and universities to uncover some of the determinants of freshmen retention rates. Two and three stage least squares are used to estimate a system of simultaneous equations. The results indicate that the acceptance rate, a required interview, and the average collegiate SAT score are major determining factors of retention rates at U.S. private colleges. A required interview increases the retention rate four percentage points. However, total enrollment would not be improved by enforcing stricter acceptance rate criteria because the probable loss in freshmen enrollment would not be sufficiently made up by greater retention rates,

Internal and Sustainable Growth Rates in the Presence of Scale Economies

Corporate finance theory provides both precise and approximate formulas for the maximum growth rate of a firm, typically called the internal growth rate (when no external funds are permitted) and the sustainable growth rate (when the capital structure is held fixed). The assumption in these approaches is that the firm experiences constant returns to scale in that sales and assets grow in parallel. Yet empirical studies repeatedly find that the production functions facing firm display modest increasing returns to scale in that seldom must assets double to double sales. Firms can grow faster when bound to using only internal sources of funding and when firms maintain a constant debt-equity ratio in the presence of scale economies. Using homogeneous production functions, the revised formulas increase the maximum rate of growth that a firm could achieve and have the traditional formulas as a special case of the more general formulas for internal and sustainable growth.