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College Quality and Wages in the United States

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  • Dan Black
  • Jeffrey Smith
  • Kermit Daniel

Abstract

We estimate the effects of the quality of the college a student attends on their later earnings using data from a cohort of US college students from the late 1970s and early 1980s. We rely on a linear selection on observables identification strategy, which is justified in our context by a very rich set of conditioning variables. We find economically important earnings effects of college quality for men and women, as well as effects on educational attainment, spousal earnings and other demographic variables. These effects remain roughly constant over time and result primarily from effects on wages, rather than from effects on hours or labor force participation. We find that, over the lower part of the range of college quality, increases in college quality (which entail higher expenditures per student) pass a simple social cost-benefit test. Copyright Verein für Socialpolitik and Blackwell Publishing Ltd. 2005.

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Bibliographic Info

Article provided by Verein für Socialpolitik in its journal German Economic Review.

Volume (Year): 6 (2005)
Issue (Month): 3 (08)
Pages: 415-443

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Handle: RePEc:bla:germec:v:6:y:2005:i:3:p:415-443

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References

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  1. Hansen, Karsten T. & Heckman, James J. & Mullen, K.J.Kathleen J., 2004. "The effect of schooling and ability on achievement test scores," Journal of Econometrics, Elsevier, vol. 121(1-2), pages 39-98.
  2. Elizabeth Cascio & Ethan Lewis, 2005. "Schooling and the AFQT: evidence from school entry laws," Working Papers 05-1, Federal Reserve Bank of Philadelphia.
  3. Dan A. Black & Jeffrey A. Smith, 2006. "Estimating the Returns to College Quality with Multiple Proxies for Quality," Journal of Labor Economics, University of Chicago Press, vol. 24(3), pages 701-728, July.
  4. Cawley, John & Heckman, James & Vytlacil, Edward, 2001. "Three observations on wages and measured cognitive ability," Labour Economics, Elsevier, vol. 8(4), pages 419-442, September.
  5. Kermit Daniel & Dan Black & Jeffery Smith, 1996. "College Characteristics and the Wages of Young Women," HEW 9604002, EconWPA.
  6. Dennis Epple & Richard Romano & Holger Sieg, 2006. "Admission, Tuition, and Financial Aid Policies in the Market for Higher Education," Econometrica, Econometric Society, vol. 74(4), pages 885-928, 07.
  7. Dan A. Black & Jeffrey Smith, 2003. "How Robust is the Evidence on the Effects of College Quality? Evidence From Matching," University of Western Ontario, CIBC Centre for Human Capital and Productivity Working Papers 20033, University of Western Ontario, CIBC Centre for Human Capital and Productivity.
  8. Daniel, K. & Black, D. & Smith, J., 1997. "College Quality and the Wages of Young Men," UWO Department of Economics Working Papers 9707, University of Western Ontario, Department of Economics.
  9. Marianne Simonsen & Lars Skipper, 2004. "Identifying Direct and Indirect Effects. Estimating th Costs of Motherhood Using Matching Estimators," Discussion Papers 03-023, Stanford Institute for Economic Policy Research.
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Citations

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Cited by:
  1. Joni Hersch, 2013. "Opting out among women with elite education," Review of Economics of the Household, Springer, vol. 11(4), pages 469-506, December.
  2. Philip R. P. Coelho & Tung Liu, 2012. "The Returns to College Education," Working Papers 201202, Ball State University, Department of Economics, revised Aug 2012.
  3. Donata Bessey, 2007. "International Student Migration to Germany," Economics of Education Working Paper Series 0006, University of Zurich, Institute for Strategy and Business Economics (ISU).
  4. Kevin Lang & Erez Siniver, 2010. "Why Is an Elite Undergraduate Education Valuable? Evidence from Israel," Boston University - Department of Economics - Working Papers Series WP2010-017, Boston University - Department of Economics.
  5. Eliasson, Kent, 2006. "How Robust is the Evidence on the Returns to College Choice? Results Using Swedish Administrative Data," UmeÃ¥ Economic Studies 692, Umeå University, Department of Economics.
  6. Broecke, Stijn, 2012. "University selectivity and earnings: Evidence from UK data on applications and admissions to university," Economics of Education Review, Elsevier, vol. 31(3), pages 96-107.
  7. Eliasson, Kent, 2006. "College Choice And Earnings Among University Graduates In Sweden," UmeÃ¥ Economic Studies 693, Umeå University, Department of Economics.
  8. Eliasson, Kent, 2006. "The Role of Ability in Estimating the Returns to College Choice: New Swedish Evidence," UmeÃ¥ Economic Studies 691, Umeå University, Department of Economics.
  9. Ignez M. Tristao, 2007. "Occupational Employment Risk and its Consequences for Unemployment Duration and Wages: Working Paper 2007-01," Working Papers 18287, Congressional Budget Office.

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