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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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Keywords: education; ability; skill premium;

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References

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  1. Caroline M. Hoxby, 2009. "The Changing Selectivity of American Colleges," NBER Working Papers 15446, National Bureau of Economic Research, Inc.
  2. 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.
  3. Daron Acemoglu, 2002. "Technical Change, Inequality, and the Labor Market," Journal of Economic Literature, American Economic Association, vol. 40(1), pages 7-72, March.
  4. Cunha, Flavio & Heckman, James & Navarro, Salvador, 2004. "Separating uncertainty from heterogeneity in life cycle earnings," Working Paper Series, IFAU - Institute for Evaluation of Labour Market and Education Policy 2005:6, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  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. 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.
  7. 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.
  8. 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.
  9. Joseph G. Altonji & Charles R. Pierret, 2001. "Employer Learning And Statistical Discrimination," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 116(1), pages 313-350, February.
  10. Pedro Carneiro & Sokbae 'Simon' Lee, 2009. "Estimating distributions of potential outcomes using local instrumental variables with an application to changes in college enrollment and wage inequality," CeMMAP working papers, Centre for Microdata Methods and Practice, Institute for Fiscal Studies CWP01/09, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  11. Bowlus, Audra J. & Robinson, Chris, 2011. "Human Capital Prices, Productivity and Growth," CLSSRN working papers clsrn_admin-2011-32, Vancouver School of Economics, revised 22 Dec 2011.
  12. 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.
  13. Chinhui Juhn & Dae-Il Kim & Francis Vella, 2004. "The Expansion of College Education in the United States: Is There Evidence of Declining Cohort Quality?," Working Papers, Department of Economics, University of Houston 2004-02, Department of Economics, University of Houston.
  14. Bishop, John Hillman, 1989. "Is the Test Score Decline Responsible for the Productivity Growth Decline?," American Economic Review, American Economic Association, vol. 79(1), pages 178-97, March.
  15. 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.
  16. John Cawley & Karen Conneely & James Heckman & Edward Vytlacil, 1996. "Cognitive Ability, Wages, and Meritocracy," NBER Working Papers 5645, National Bureau of Economic Research, Inc.
  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. 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.
  19. Manski, Charles F., 1989. "Schooling as experimentation: a reappraisal of the postsecondary dropout phenomenon," Economics of Education Review, Elsevier, vol. 8(4), pages 305-312, August.
  20. 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.
  21. 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, vol. 82(3), pages 371-92, June.
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Cited by:
  1. Andrew Rendall & Michelle Rendall, 2014. "Math matters: education choices and wage inequality," ECON - Working Papers, Department of Economics - University of Zurich 160, Department of Economics - University of Zurich.

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