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Entry and Competition in the Market for Short-Cycle Programs (English)

Short-cycle higher education programs form skilled human capital in two or three years and are eminently oriented to the labor market. While they could play a key role in the upskilling and reskilling of the workforce required for employment recovery after the COVID-19 pandemic, they will only do so if their supply responds fast and nimbly to the skill needs to local labor markets. This paper studies the entry, competition, and turnover of short-cycle higher education programs (SCPs) in Colombia. It documents a large expansion in the number of programs over the past fifteen years and studies the frequency of program entry and exit. It finds that the market for SCPs is more dynamic than the market for bachelor's programs, as it exhibits greater turnover or “churn" of programs, with a significantly higher rate of program entry and exit in a given year. Exploiting data on local productivity and employment by field of study, the paper finds that SCPs are more responsive than bachelor's programs to changes in local labor demand. Among SCP providers, private and non-university institutions respond the most to the local economy. SCP entry is deterred by the presence of competitors and responds to cost considerations, particularly among private institutions. For a given institution, exit and entry decisions are highly correlated within a field of study. While enrollment is sensitive to the number of competitors, institutions differentiate their product by tuition, field, and geographic coverage. Overall, the evidence suggests that SCPs might indeed respond fast and nimbly to the local labor market needs created by the pandemic.


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    Carranza,Juan Esteban, Ferreyra,Maria Marta, Gazmuri,Ana, Franco,Andrea

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    Policy Research Working Paper

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    Latin America & Caribbean,

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    Entry and Competition in the Market for Short-Cycle Programs

  • Keywords

    local labor market; higher education program; higher education institution; local economic activity; higher education enrollment; higher education student; large metropolitan areas; share of enrollment; linear probability model; growth in enrollment; higher test score; labor market trend; enrollment of student; take time; positive demand shock; demand for labor; types of student; decrease in enrollment; public higher education; community college program; private institution; labor demand; economic sector; market structure; employment share; standard error; vocational program; local demand; explanatory variable; market characteristic; public program; entry cost; public subsidy; local market; administrative datum; student characteristic; choice model; geographic location; student demand; positive correlation; local economy; independent variable; descriptive statistic; private program; rural area; time t; unobserved characteristic; government regulation; default rate; federal loan; lower price; administrative constraint; lower rate; budgetary source; market base; estimation result; exogenous variable; exogenous market; capacity constraint; budget allocation; enrollment growth; local budget; student service; econometric challenge; program enrollment; aggregate shock; private provider; empirical evidence; supply side; productivity data; formal sector; market level; average share; geographic area; measure of use; market size; human capital; supply shock; skill need; regulatory change; french national; budget decision; research assistance; equilibrium outcome; public private; high school; Research Support; geographic region; time horizon; graduate degree; development policy; open access; geographic coverage; employment measure; empirical analysis; several years; admission requirement; net return; analytical skill; electronic platform; minimum wage; lagged change; enrollment change; higher tuition; Technical Training; exam score



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Carranza,Juan Esteban Ferreyra,Maria Marta Gazmuri,Ana Franco,Andrea

Entry and Competition in the Market for Short-Cycle Programs (English). Policy Research working paper,no. WPS 9716,COVID-19 (Coronavirus) Washington, D.C. : World Bank Group.