The US/Canada Difference in Postsecondary Educational Choice

This paper attempts to tackle the puzzle of why more Canadians choose community colleges over universities than their American counterparts, when previous research has suggested that the return to community college education is low in Canada. Using data from the Survey of Labour and Income Dynamics for Canada and the National Longitudinal Survey of Youth 79 for the US, I estimate returns to education with a trinomial selection correction using various instruments. I simulate the educational choices of Canadians who face American returns to education, and vice versa. I found that Canadians have a relatively strong incentive to choose community colleges if occupational choices are controlled for. The second finding is that Canadian universities and colleges specialize in different types of human capital. Also, my analysis confirms that the elasticity of educational attainment to tuition and fees is low. Finally, the self-selection processes in the two countries are different. More able Americans have higher educational attainment while more productive Canadians prefer going to universities but not community colleges