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The Role of Mathematical and Verbal Skills on the Returns to Graduate and Professional Education

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  • Song, Moohoun
  • Orazem, Peter
  • Wohlgemuth, Darin

Abstract

Students in majors with higher average quantitative GRE scores are less likely to attend graduate school while students in majors with higher average verbal GRE scores are more likely to attend graduate school. This sorting effect means that students whose cognitive skills are associated with lower earnings at the bachelorï¾’s level are the most likely to attend graduate school. As a result, there is a substantial downward bias in estimated returns to graduate education. Correcting for the sorting effect raises estimated annualized returns to a Masterï¾’s or doctoral degree from about 5% to 7.3% and 12.8% respectively. Estimated returns to professional degrees rise from 13.9% to 16.6%. These findings correspond to a large increase in relative earnings received by postgraduate degree holders in the United States over the past 20 years.

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Bibliographic Info

Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 12843.

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Date of creation: 07 Sep 2007
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Publication status: Published in Economics of Education Review, December 2008, vol. 27 no. 6, pp. 664-675
Handle: RePEc:isu:genres:12843

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Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
Phone: +1 515.294.6741
Fax: +1 515.294.0221
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Web page: http://www.econ.iastate.edu
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Keywords: sorting; Postgraduate; Rate of return; Demand for schooling; Quantitative skills; Qualitative skills;

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