Cheapskin Effects? The Heterogeneous Value of Industry-Recognized Certificates Earned by High School Students

• In Event: Career Pathways and Credentials: New Evidence on Measurement, Value, and Access

Abstract

The past decade saw a growing interest in college and career readiness (CCR) as policymakers, educators, and researchers seek to ensure, all high school (HS) graduates are prepared for college and the workforce. Industry-Recognized Certificates (IRCs) – credentials that industry groups and quasi-government entities award for displaying competency in specified domains (e.g., Certified Dental Assistant) – have emerged as a popular CCR measure. Embedded in, but distinct from Career and Technical Education (CTE), IRCs might serve as a job market signal for the CTE skills, termed the Sheepskin effect.

IRCs have rapidly infused into federal and state policies: at least 16 states use IRCs as a CCR indicator. These strong incentives, coupled with early research linking IRC receipt to improved HS graduation, college enrollment, and short-term wages, have fueled explosive growth. However, this growth accompanies a CTE-IRC decoupling – many students earn IRCs misaligned with their CTE coursework.

Due to the relative novelty of this topic, with limited years of data tracing IRC earners’ progression through the labor market (LM), researchers have yet to identify which IRCs are beneficial for students’ LM outcomes. Therefore, we evaluate how IRC attainment relates to postsecondary employment, wages, and employment stability (ES), and whether the outcomes vary by IRC types and student demographics. We utilize the Texas Education Research Center data and Correlated Random Effects model to address our research questions. Our sample consists of roughly 14.75 million HS graduates between 2017-2022, whom we follow into the postsecondary LM through the fourth fiscal quarter in 2023. Our IRC measures include: an indicator for earning any IRC, IRC aligned and misaligned with CTE concentration, IRC count, and IRC clusters (e.g., Health).

Overall, we find IRC attainment is meaningfully associated with better LM outcomes, with variation by alignment, cluster, and student demographics. Any IRC attainment is unrelated to employment, boosts wages by 8.7%, and ES by 0.2 percentage points. These gains are larger than the gains in CTE concentration, indicating evidence of the Sheepskin effects. Aligned IRCs improve LM outcomes, whereas misaligned IRCs do the opposite – meaning only aligned IRCs yield sheepskin effects. Overall, Construction and Transportation IRCs are associated with LM gains for all demographics. Across all groups, White, male, and non-low-income students show larger gains. Our findings also reveal, the initial gains from Cosmetology IRCs reverse over the years.

As state and federal policies increasingly emphasize the value of IRC receipt in HS, evaluating which of the three hundred state-approved IRCs benefit students in the LM post-HS graduation and promote equity is paramount. Our study complements the literature by identifying IRCs’ medium-term LM returns using multiple IRC measures. We also present useful ways for stakeholders to view IRCs as a skill set that can help redesign offerings as the LM gradually evolves with changing IRC demand and supply. Such revisions and streamlining can better prepare students with skills that fit LM needs, maximize economic benefits, and improve students’ long-term portfolios.

Author

• Tasneem Sultana, University of Texas at Austin
  Presenting Author