Quality disclosures in higher education institutions

Bridging the gap between quality of education and labour outcomes in emerging economies

There is a prevalent school of thought that links higher education to social mobility. While some evidence from countries such as Denmark supports this thinking, there is scant (and mixed) evidence from developing countries, such as Brazil, Chile and Ecuador; suggesting that higher education may be a less powerful causal factor in social mobility mechanism in societies with high inequality and weak institutions. The research team studies how mandatory disclosures concerning quality in higher education impact degree choices, quality of degree programmes, employment outcomes and general levels of inequity.



The challenge

Intuition and common sense tell us that higher education plays a key role in improving economic outcomes and increasing social mobility. However, this may not always be the case where a country has low proportion of the population attending higher education and information about access to and quality of higher education is difficult to obtain or understand for families. This could also be due to the impact of extraneous factors relating to demography, access to peer networks, and the general skill and training levels of graduates of higher education institutions. However, it is difficult to distinguish between the factors that influence the demand for education versus its supply; let alone at different quality levels. The research team use the introduction of a quality signal in the market for higher education in Ecuador as a natural experiment that doesn’t change supply but should impact demand, both for the education and for graduates.

The intervention

The Ecuador government introduced a policy to rank all its educational institutions for a license to continue operations. The assessment criteria include factors such as infrastructure, teacher training and rate of graduation. Using data from the outcomes of this policy, the study aims to use a difference-in-discontinuity design that exploits time-series and cross-sectional variance analyses to isolate the impact that information on educational quality has on degree choices, quality of degree programmes, employment outcomes and mobility. The team assembled a detailed micro dataset that includes demographic dissections such as family background, parental income and subsequent employment outcomes.

Time-series variance analysis allows us to compare the outcomes of students who received degrees prior to the implementation of the government policy with the outcomes of those who received it afterwards. Cross-sectional variance analysis allows us to assess the impact of passing the quality benchmark established by the policy by a small margin versus failing it by a small margin.

The potential impact

Using the proposed analysis, the team will empirically assess the impact of informational quality on employment and educational outcomes. As a result, this study will offer an understanding of how mandatory disclosures in higher education impact degree choices, quality of degree programmes, employment outcomes and general levels of inequity. This will help shape better higher education policies in emerging economies.