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Student Abilities During the Expansion of US Education

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  • Lutz Hendricks
  • Todd Schoellman

Abstract

The US experienced two dramatic changes in the structure of education in a fifty year period. The first was a large expansion of educational attainment; the second, an increase in test score gaps between college bound and non-college bound students. We study the impact of these two trends on the composition of school groups by observed ability and the importance of these composition effects for wages. Our main finding is that there is a growing gap between the abilities of high school and college-educated workers that accounts for one-half of the college wage premium for recent cohorts and for the entire rise of the college wage premium for the 1910-1960 birth cohorts.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2013/wp-cesifo-2013-12/cesifo1_wp4537.pdf
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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 4537.

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Date of creation: 2013
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Handle: RePEc:ces:ceswps:_4537

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Related research

Keywords: education; ability; skill premium;

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References

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  1. Bowlus, Audra J. & Robinson, Chris, 2011. "Human Capital Prices, Productivity and Growth," CLSSRN working papers, Vancouver School of Economics clsrn_admin-2011-32, Vancouver School of Economics, revised 22 Dec 2011.
  2. Bishop, John Hillman, 1989. "Is the Test Score Decline Responsible for the Productivity Growth Decline?," American Economic Review, American Economic Association, American Economic Association, vol. 79(1), pages 178-97, March.
  3. Stephen V. Cameron & Christopher Taber, 2004. "Estimation of Educational Borrowing Constraints Using Returns to Schooling," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 112(1), pages 132-182, February.
  4. Levy, Frank & Murnane, Richard J, 1992. "U.S. Earnings Levels and Earnings Inequality: A Review of Recent Trends and Proposed Explanations," Journal of Economic Literature, American Economic Association, vol. 30(3), pages 1333-81, September.
  5. Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 101(3), pages 410-42, June.
  6. Chinhui Juhn & Dae Il Kim & Francis Vella, 2005. "The Expansion of College Education in the United States: Is There Evidence of Declining Cohort Quality?," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 43(2), pages 303-315, April.
  7. Caroline M. Hoxby, 2009. "The Changing Selectivity of American Colleges," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 23(4), pages 95-118, Fall.
  8. Daron Acemoglu, 2000. "Technical Change, Inequality, and the Labor Market," NBER Working Papers 7800, National Bureau of Economic Research, Inc.
  9. Murnane, Richard J & Willett, John B & Levy, Frank, 1995. "The Growing Importance of Cognitive Skills in Wage Determination," The Review of Economics and Statistics, MIT Press, vol. 77(2), pages 251-66, May.
  10. Manski, Charles F., 1989. "Schooling as experimentation: a reappraisal of the postsecondary dropout phenomenon," Economics of Education Review, Elsevier, Elsevier, vol. 8(4), pages 305-312, August.
  11. John Cawley & Karen Conneely & James Heckman & Edward Vytlacil, 1996. "Cognitive Ability, Wages, and Meritocracy," NBER Working Papers 5645, National Bureau of Economic Research, Inc.
  12. Cunha, Flavio & Heckman, James J. & Navarro, Salvador, 2004. "Separating Uncertainty from Heterogeneity in Life Cycle Earnings," IZA Discussion Papers 1437, Institute for the Study of Labor (IZA).
  13. Joseph G. Altonji & Charles R. Pierret, . "Employer Learning and Statistical Discrimination," IPR working papers, Institute for Policy Resarch at Northwestern University 97-18, Institute for Policy Resarch at Northwestern University.
  14. Taber, Christopher R, 2001. "The Rising College Premium in the Eighties: Return to College or Return to Unobserved Ability?," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 68(3), pages 665-91, July.
  15. Casey B. Mulligan, 1999. "Galton versus the Human Capital Approach to Inheritance," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 107(S6), pages S184-S224, December.
  16. Carneiro, Pedro & Lee, Sokbae, 2009. "Estimating distributions of potential outcomes using local instrumental variables with an application to changes in college enrollment and wage inequality," Journal of Econometrics, Elsevier, Elsevier, vol. 149(2), pages 191-208, April.
  17. Melissa Osborne & Herbert Gintis & Samuel Bowles, 2001. "The Determinants of Earnings: A Behavioral Approach," Journal of Economic Literature, American Economic Association, vol. 39(4), pages 1137-1176, December.
  18. Bound, John & Johnson, George, 1992. "Changes in the Structure of Wages in the 1980's: An Evaluation of Alternative Explanations," American Economic Review, American Economic Association, American Economic Association, vol. 82(3), pages 371-92, June.
  19. Baris Kaymak, 2009. "Ability Bias and the Rising Education Premium in the United States: A Cohort-Based Analysis," Journal of Human Capital, University of Chicago Press, University of Chicago Press, vol. 3(3), pages 224-267.
  20. James J. Heckman & Lance Lochner & Christopher Taber, 1998. "Explaining Rising Wage Inequality: Explorations with a Dynamic General Equilibrium Model of Labor Earnings with Heterogeneous Agents," NBER Working Papers 6384, National Bureau of Economic Research, Inc.
  21. John Laitner, 2000. "Earnings within Education Groups and Overall Productivity Growth," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 108(4), pages 807-832, August.
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Cited by:
  1. Michelle Rendall & Andrew Rendall, 2013. "Math Matters: Student Ability, College Majors, and Wage Inequality," 2013 Meeting Papers, Society for Economic Dynamics 1196, Society for Economic Dynamics.

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