The effect of college mergers on student dropout behaviour

This paper investigates the effect of college merger on the probability of students dropping out of college. In addition we assess whether this effect persists over time and whether there is variation in the risk of drop out by programme area. To answer these questions we use a large administrative data set relating to the population of students enrolled in the further education sector for multiple cohorts of students (i.e. 2002-03 to 2007-08 cohorts). We employ the propensity score matching methods and difference-in-differences methods to overcome the fundamental evaluation problem and to remove the effect of unobserved student (and college) heterogeneity. Our evidence suggests that the risk of drop out has varied over time (by cohort), reducing the risk by about 1-2 percentage points for earlier cohorts, which contrasts with positive effects for later cohorts, which were as high as 5 percentage points. We also show that the effects of merger persisted for 1-2 years and that there was variation in the effect of a merger by programme area. Our results raise important implications for policy makers insofar as mergers cannot be unanimously assumed to be either negative or positive. The effect probably varies with the nature of the merger (voluntary versus involuntary) and by programme area regardless of the type of merger.