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Interpreting Degree Effects in the Returns to Education

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  • Flores-Lagunes, Alfonso

    ()
    (Syracuse University)

  • Light, Audrey

    ()
    (Ohio State University)

Abstract

Researchers often identify degree effects by including degree attainment (D) and years of schooling (S) in a wage model, yet the source of independent variation in these measures is not well understood. We argue that S is negatively correlated with ability among degree-holders because the most able graduate the fastest, while a positive correlation exists among dropouts because the most able benefit from increased schooling. Using data from the NLSY79, we find support for this explanation, and we reject the notion that the independent variation in S and D reflects reporting error.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4169.

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Length: 38 pages
Date of creation: May 2009
Date of revision:
Publication status: published in: Journal of Human Resources, 2010, 45 (2), 439-467
Handle: RePEc:iza:izadps:dp4169

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Keywords: returns to education; degree effects;

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References

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Cited by:
  1. O’Mahony, Mary & Pastor, José Manuel & Peng, Fei & Serrano, Lorenzo & Hernández, Laura, 2012. "Output growth in the post‐compulsory education sector: the European experience," MPRA Paper 44016, University Library of Munich, Germany.
  2. Light, Audrey & McGee, Andrew, 2012. "Employer Learning and the "Importance" of Skills," IZA Discussion Papers 6623, Institute for the Study of Labor (IZA).
  3. Carlos A. Flores & Alfonso Flores-Lagunes, 2013. "Partial Identification of Local Average Treatment Effects With an Invalid Instrument," Journal of Business & Economic Statistics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 31(4), pages 534-545, October.
  4. John Bound & Sarah Turner, 2007. "Understanding the Increased Time to the Baccalaureate Degree," Discussion Papers, Stanford Institute for Economic Policy Research 06-043, Stanford Institute for Economic Policy Research.

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