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Interpreting Degree Effects in the Returns to Education

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  • Flores-Lagunes, Alfonso

    ()
    (Binghamton University, New York)

  • 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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Citations

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Cited by:
  1. Carlos A. Flores & Alfonso Flores-Lagunes, 2010. "Partial Identification of Local Average Treatment Effects with an Invalid Instrument," Working Papers 2010-24, University of Miami, Department of Economics.
  2. John Bound & Sarah Turner, 2007. "Understanding the Increased Time to the Baccalaureate Degree," Discussion Papers 06-043, Stanford Institute for Economic Policy Research.
  3. Light, Audrey & McGee, Andrew, 2012. "Employer Learning and the "Importance" of Skills," IZA Discussion Papers 6623, Institute for the Study of Labor (IZA).
  4. 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.

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