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Does It Pay To Attend An Elite Private College? Cross Cohort Evidence on the Effects of College Quality on Earnings

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  • Dominic J. Brewer
  • Eric Eide
  • Ronald G. Ehrenberg

Abstract

While there is evidence of a substantial and rising labor market premium associated with college attendance, little is known about how this premium varies across institutions of different quality and across time. Previous research which has estimated the return to college quality has not taken into account that individuals likely select the type of college they attend based in part on the expected economic return and net costs. In this paper we explicitly model high school students' choice of college type (characterized by quality and control) based on individual and family characteristics (including ability and parental economic status), and an estimate of the net costs of attendance and expected labor market return. We estimate selectivity corrected outcome equations, using data from both the National Longitudinal Study of the High School Class of 1972 and High School and Beyond, which permit us to determine the effects of college quality on wages and earnings and how this effect varies across time. Even after controlling for selection effects there is strong evidence of significant economic return to attending an elite private institution, and some evidence that this premium has increased over time.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 5613.

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Date of creation: Jun 1996
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Publication status: published as Brewer, Dominic J., Eric R. Eide and Ronald G. Ehrenberg. "Does It Pay To Attend An Elite Private College? A Cross-Cohort Evidence On The Effects Of College Type On Earnings?," Journal of Human Resources, 1999, v34(1,Winter), 104-123.
Handle: RePEc:nbr:nberwo:5613

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  1. Lewis C. Solmon, 1973. "The Definition and Impact of College Quality," NBER Working Papers 0007, National Bureau of Economic Research, Inc.
  2. Heckman, James J, 1979. "Sample Selection Bias as a Specification Error," Econometrica, Econometric Society, vol. 47(1), pages 153-61, January.
  3. Loury, Linda Datcher & Garman, David, 1995. "College Selectivity and Earnings," Journal of Labor Economics, University of Chicago Press, vol. 13(2), pages 289-308, April.
  4. James, Estelle, et al, 1989. "College Quality and Future Earnings: Where Should You Send Your Child to College?," American Economic Review, American Economic Association, vol. 79(2), pages 247-52, May.
  5. Levy, Frank & Murnane, Richard J, 1992. "U.S. Earnings Levels and Earnings Inequality: A Review of Recent Trends and Proposed Explanations," Journal of Economic Literature, American Economic Association, vol. 30(3), pages 1333-81, September.
  6. Kermit Daniel & Dan Black & Jeffery Smith, 1996. "College Quality and the Wages of Young Men," HEW 9604001, EconWPA.
  7. Robert J. Willis & Sherwin Rosen, 1978. "Education and Self-Selection," NBER Working Papers 0249, National Bureau of Economic Research, Inc.
  8. Lewis C. Solomon, 1975. "The Definition of College Quality and Its Impact on Earnings," NBER Chapters, in: Explorations in Economic Research, Volume 2, number 4, pages 537-587 National Bureau of Economic Research, Inc.
  9. Gyourko, Joseph & Tracy, Joseph, 1988. "An Analysis of Public- and Private-Sector Wages Allowing for Endogenous Choices of Both Government and Union Status," Journal of Labor Economics, University of Chicago Press, vol. 6(2), pages 229-53, April.
  10. Fox, Marc, 1993. "Is it a good investment to attend an elite private college?," Economics of Education Review, Elsevier, vol. 12(2), pages 137-151, June.
  11. Jeff Grogger & Eric Eide, 1995. "Changes in College Skills and the Rise in the College Wage Premium," Journal of Human Resources, University of Wisconsin Press, vol. 30(2), pages 280-310.
  12. Trost, Robert P & Lee, Lung-Fei, 1984. "Technical Training and Earnings: A Polychotomous Choice Model with Selectivity," The Review of Economics and Statistics, MIT Press, vol. 66(1), pages 151-56, February.
  13. Ehrenberg, Ronald G. & Brewer, Dominic J., 1994. "Do school and teacher characteristics matter? Evidence from High School and Beyond," Economics of Education Review, Elsevier, vol. 13(1), pages 1-17, March.
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