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Labor Market Returns to Two- and Four-Year Colleges: Is a Credit a Credit and Do Degrees Matter?

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Author Info
Thomas J. Kane
Cecilia E. Rouse
Abstract

In CPS data, the 20% of the civilian labor force with 1-3 years of college earn 15% more than high school graduates. We use data from the National Longitudinal Study of the High School Class of1972 which includes postsecondary transcript data and the NLSY to study the distinct returns to 2-year and 4-year college attendance and degree completion. Controlling for background and measured ability, wage differentials for both 2-year and 4-year college credits are positive and similar. We find that the average 2-year and 4-year college student earned roughly 5% more than high school graduates for every year of credits completed. Second, average bachelor and associate degree recipients did not earn significantly more than those with similar numbers of college credits and no degree, suggesting that the credentialing effects of these degrees are small. We report similar results from the NLSY and the CPS. We also pursue two IV strategies to identify measurement error and selection bias. First, we use self-reported education as an instrument for transcript reported education. Second, we use public tuition and distance from the closest 2-year and 4-year colleges as instruments, which we take as orthogonal to schooling measurement error and other unobserved characteristics of college students. We find that in our data the two biases roughly cancel each other, suggesting that the results above are, if anything, understated.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 4268.

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Date of creation: Jan 1993
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Handle: RePEc:nbr:nberwo:4268

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J00 - Labor and Demographic Economics - - General - - - General

References listed on IDEAS
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. David Card, 1994. "Earnings, Schooling, and Ability Revisited," NBER Working Papers 4832, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. repec:fth:prinin:338 is not listed on IDEAS
  3. Julian R. Betts & Laurel L. McFarland, 1993. "Safe Port in a Storm: The Impact of Labor Market Conditions on Community College Enrollments," University of California at San Diego, Economics Working Paper Series 93-12r, Department of Economics, UC San Diego. [Downloadable!]
  4. David Card, 1993. "Using Geographic Variation in College Proximity to Estimate the Return to Schooling," NBER Working Papers 4483, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  5. Thomas J. Kane & Cecilia Elena Rouse & Douglas Staiger, 1999. "Estimating Returns to Schooling When Schooling is Misreported," NBER Working Papers 7235, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  6. Hidehiko Ichimura & Christopher R. Taber, 2000. "Direct Estimation of Policy Impacts," NBER Technical Working Papers 0254, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  7. repec:bep:eapadv:v:3:y:2003:i:1:p:1018-1018 is not listed on IDEAS
  8. repec:fth:prinin:331 is not listed on IDEAS
  9. David Card, 2000. "Estimating the Return to Schooling: Progress on Some Persistent Econometric Problems," NBER Working Papers 7769, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  10. Sascha BECKER & Frank SIEBERN-THOMAS, 2001. "Returns to Education in Germany: A Variable Treatment Intensity Approach," Economics Working Papers ECO2001/09, European University Institute. [Downloadable!]
  11. Orley Ashenfelter & Cecilia Rouse, 1997. "Income, Schooling, and Ability: Evidence from a New Sample of Identical Twins," NBER Working Papers 6106, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  12. Emek Basker, 2007. "When Good Instruments Go Bad," Working Papers 0706, Department of Economics, University of Missouri. [Downloadable!]
  13. repec:fth:prinin:415 is not listed on IDEAS
  14. Jin Huem Park, 1994. "Estimation of Sheepskin Effects and Returns to Schooling Using he Old and the New CPS Measures of Educational Attainment," Working Papers 717, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
  15. repec:fth:prinin:317 is not listed on IDEAS
  16. A. Abigail Payne & Aloysius Siow, 1998. "Estimating the Effects of Federal Research Funding on Universities using Alumni Representation on Congressional Appropriations Committees," Working Papers siow-99-02, University of Toronto, Department of Economics. [Downloadable!]
  17. Philip Oreopoulos & Kjell G. Salvanes, 2009. "How large are returns to schooling? Hint: Money isn't everything," NBER Working Papers 15339, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  18. Orley Ashenfelter & Alan Krueger, 1992. "Estimates of the Economic Return to Schooling from a New Sample of Twins," Working Papers 683, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
    Other versions:
  19. Card, David & Krueger Alan B, 1996. "School Resources and Student Outcomes: An Overview of the Literature and New Evidence from North and South Carolina," Journal of Economic Perspectives, American Economic Association, vol. 10(4), pages 31-50, Fall. [Downloadable!] (restricted)
    Other versions:
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