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Quantile Treatment Effects of College Quality on Earnings: Evidence from Administrative Data in Texas

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  • Rodney J. Andrews
  • Jing Li
  • Michael F. Lovenheim

Abstract

This paper uses administrative data on schooling and earnings from Texas to estimate the effect of college quality on the distribution of earnings. We proxy college quality using the college sector from which students graduate and focus on identifying how graduating from UT-Austin, Texas A\&M or a community college affects the distribution of earnings relative to graduating from a non-flagship university in Texas. Our methodological approach uses the rich set of observable student academic ability and background characteristics in the data to adjust the earnings distributions across college sectors for the fact that college sector quality is correlated with factors that also affect earnings. Although our mean earnings estimates are similar to previous work in this area, we find evidence of substantial heterogeneity in the returns to college quality. At UT-Austin, the returns increase across the earnings distribution, while at Texas A\&M they tend to decline with one's place in the distribution. For community college graduates, the returns relative to non-flagship four-year graduates are negative across most of the distribution of earnings, but they approach zero and become positive for higher earners. Our data also allow us to estimate effects separately by race and ethnicity, and we find that historically under-represented minorities experience the highest returns in the upper tails of the earnings distribution, particularly among UT-Austin and community college graduates. While we focus on graduates, we also show our estimates are robust to examining college attendees as well as to many other changes in the sample and to the estimation strategy. Overall, these estimates provide the first direct evidence of the extent of heterogeneity in the effect of college quality on subsequent earnings, and our estimates point to the need to consider such heterogeneity in human capital models that incorporate college quality.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18068.

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Date of creation: May 2012
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Handle: RePEc:nbr:nberwo:18068

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References

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  1. Lockwood Reynolds, C., 2012. "Where to attend? Estimating the effects of beginning college at a two-year institution," Economics of Education Review, Elsevier, vol. 31(4), pages 345-362.
  2. Jesse Rothstein & Albert Yoon, 2006. "Mismatch in Law School," Working Papers 79, Princeton University, Department of Economics, Center for Economic Policy Studies..
  3. Michael F. Lovenheim & C. Lockwood Reynolds, 2012. "The Effect of Housing Wealth on College Choice: Evidence from the Housing Boom," NBER Working Papers 18075, National Bureau of Economic Research, Inc.
  4. Marianne Bitler & Jonah Gelbach & Hilary Hoynes, 2003. "What Mean Impacts Miss: Distributional Effects of Welfare Reform Experiments," NBER Working Papers 10121, National Bureau of Economic Research, Inc.
  5. Nicole Fortin & Thomas Lemieux & Sergio Firpo, 2010. "Decomposition Methods in Economics," NBER Working Papers 16045, National Bureau of Economic Research, Inc.
  6. Arcidiacono, Peter, 2002. "Ability Sorting and the Returns to College Major," Working Papers, Duke University, Department of Economics 02-26, Duke University, Department of Economics.
  7. Joshua Angrist & Victor Chernozhukov & Iván Fernández-Val, 2006. "Quantile Regression under Misspecification, with an Application to the U.S. Wage Structure," Econometrica, Econometric Society, Econometric Society, vol. 74(2), pages 539-563, 03.
  8. Flores, Carlos A. & Mitnik, Oscar A., 2009. "Evaluating Nonexperimental Estimators for Multiple Treatments: Evidence from Experimental Data," IZA Discussion Papers 4451, Institute for the Study of Labor (IZA).
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Cited by:
  1. C. Kirabo Jackson & Rucker Johnson & Claudia Persico, 2014. "The Effect of School Finance Reforms on the Distribution of Spending, Academic Achievement, and Adult Outcomes," NBER Working Papers 20118, National Bureau of Economic Research, Inc.
  2. Michael F. Lovenheim & C. Lockwood Reynolds, 2012. "The Effect of Housing Wealth on College Choice: Evidence from the Housing Boom," NBER Working Papers 18075, National Bureau of Economic Research, Inc.
  3. Michael F. Lovenheim & Emily G. Owens, 2013. "Does Federal Financial Aid Affect College Enrollment? Evidence from Drug Offenders and the Higher Education Act of 1998," NBER Working Papers 18749, National Bureau of Economic Research, Inc.
  4. Rodney Andrews & Jing Li & Michael Lovenheim, 2014. "Heterogeneous Paths Through College: Detailed Patterns and Relationships with Graduation and Earnings," NBER Working Papers 19935, National Bureau of Economic Research, Inc.
  5. Bruce, Donald J. & Carruthers, Celeste K., 2014. "Jackpot? The impact of lottery scholarships on enrollment in Tennessee," Journal of Urban Economics, Elsevier, vol. 81(C), pages 30-44.
  6. Deryugina, Tatyana & Shurchkov, Olga, 2013. "Does Beauty Matter in Undergraduate Education?," MPRA Paper 53582, University Library of Munich, Germany.

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