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College Quality and Wages in the United States

Author

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  • Dan Black
  • Jeffrey Smith
  • Kermit Daniel

Abstract

We estimate the effects of the quality of the college a student attends on their later earnings using data from a cohort of US college students from the late 1970s and early 1980s. We rely on a linear selection on observables identification strategy, which is justified in our context by a very rich set of conditioning variables. We find economically important earnings effects of college quality for men and women, as well as effects on educational attainment, spousal earnings and other demographic variables. These effects remain roughly constant over time and result primarily from effects on wages, rather than from effects on hours or labor force participation. We find that, over the lower part of the range of college quality, increases in college quality (which entail higher expenditures per student) pass a simple social cost-benefit test. Copyright Verein für Socialpolitik and Blackwell Publishing Ltd. 2005.

Suggested Citation

  • Dan Black & Jeffrey Smith & Kermit Daniel, 2005. "College Quality and Wages in the United States," German Economic Review, Verein für Socialpolitik, vol. 6(3), pages 415-443, August.
  • Handle: RePEc:bla:germec:v:6:y:2005:i:3:p:415-443
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    References listed on IDEAS

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    1. Kermit Daniel & Dan Black & Jeffery Smith, 1996. "College Quality and the Wages of Young Men," HEW 9604001, University Library of Munich, Germany.
    2. Hansen, Karsten T. & Heckman, James J. & Mullen, K.J.Kathleen J., 2004. "The effect of schooling and ability on achievement test scores," Journal of Econometrics, Elsevier, vol. 121(1-2), pages 39-98.
    3. Cascio, Elizabeth U., 2004. "Schooling and the AFQT: Evidence from School Entry Laws," Santa Cruz Department of Economics, Working Paper Series qt8zm571cw, Department of Economics, UC Santa Cruz.
    4. Black, Dan A. & Smith, J.A.Jeffrey A., 2004. "How robust is the evidence on the effects of college quality? Evidence from matching," Journal of Econometrics, Elsevier, vol. 121(1-2), pages 99-124.
    5. A. D. Roy, 1951. "Some Thoughts On The Distribution Of Earnings," Oxford Economic Papers, Oxford University Press, vol. 3(2), pages 135-146.
    6. Dan A. Black & Jeffrey A. Smith, 2006. "Estimating the Returns to College Quality with Multiple Proxies for Quality," Journal of Labor Economics, University of Chicago Press, vol. 24(3), pages 701-728, July.
    7. Kermit Daniel & Dan Black & Jeffery Smith, 1996. "College Characteristics and the Wages of Young Women," HEW 9604002, University Library of Munich, Germany.
    8. Marianne Simonsen & Lars Skipper, 2004. "Identifying Direct and Indirect Effects. Estimating th Costs of Motherhood Using Matching Estimators," Discussion Papers 03-023, Stanford Institute for Economic Policy Research.
    9. Dennis Epple & Richard Romano & Holger Sieg, 2006. "Admission, Tuition, and Financial Aid Policies in the Market for Higher Education," Econometrica, Econometric Society, vol. 74(4), pages 885-928, July.
    10. Cawley, John & Heckman, James & Vytlacil, Edward, 2001. "Three observations on wages and measured cognitive ability," Labour Economics, Elsevier, vol. 8(4), pages 419-442, September.
    11. repec:cup:apsrev:v:95:y:2001:i:01:p:49-69_00 is not listed on IDEAS
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    Citations

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    Cited by:

    1. Lang, Kevin & Siniver, Erez, 2011. "Why is an elite undergraduate education valuable? Evidence from Israel," Labour Economics, Elsevier, vol. 18(6), pages 767-777.
    2. Eleanor Wiske Dillon & Jeffrey Andrew Smith, 2017. "Determinants of the Match between Student Ability and College Quality," Journal of Labor Economics, University of Chicago Press, vol. 35(1), pages 45-66.
    3. repec:hrv:hksfac:34298861 is not listed on IDEAS
    4. Donata Bessey, 2012. "International student migration to Germany," Empirical Economics, Springer, vol. 42(1), pages 345-361, February.
    5. Xin Meng & Chikako Yamauchi, 2015. "Children of Migrants: The Cumulative Impact of Parental Migration on their Children's Education and Health Outcomes," GRIPS Discussion Papers 15-07, National Graduate Institute for Policy Studies.
    6. Philip R. P. Coelho & Tung Liu, 2012. "The Returns to College Education," Working Papers 201202, Ball State University, Department of Economics, revised Aug 2012.
    7. Eliasson, Kent, 2006. "How Robust is the Evidence on the Returns to College Choice? Results Using Swedish Administrative Data," Umeå Economic Studies 692, Umeå University, Department of Economics.
    8. Rodney J. Andrews & John Thompson, 2017. "Earning your CAP: A Comprehensive Analysis of The University of Texas System's Coordinated Admissions Program," NBER Working Papers 23442, National Bureau of Economic Research, Inc.
    9. Milla, Joniada, 2017. "The Context-Bound University Selectivity Premium," IZA Discussion Papers 11025, Institute for the Study of Labor (IZA).
    10. Meng, Xin & Yamauchi, Chikako, 2015. "Children of Migrants: The Impact of Parental Migration on Their Children's Education and Health Outcomes," IZA Discussion Papers 9165, Institute for the Study of Labor (IZA).
    11. repec:pal:easeco:v:43:y:2017:i:4:d:10.1057_eej.2015.44 is not listed on IDEAS
    12. Eliasson, Kent, 2006. "The Role of Ability in Estimating the Returns to College Choice: New Swedish Evidence," Umeå Economic Studies 691, Umeå University, Department of Economics.
    13. Hinrichs, Peter, 2014. "Affirmative action bans and college graduation rates," Economics of Education Review, Elsevier, vol. 42(C), pages 43-52.
    14. Ignez M. Tristao, 2007. "Occupational Employment Risk and its Consequences for Unemployment Duration and Wages: Working Paper 2007-01," Working Papers 18287, Congressional Budget Office.
    15. Eliasson, Kent, 2006. "College Choice And Earnings Among University Graduates In Sweden," Umeå Economic Studies 693, Umeå University, Department of Economics.
    16. Joni Hersch, 2013. "Opting out among women with elite education," Review of Economics of the Household, Springer, vol. 11(4), pages 469-506, December.
    17. Broecke, Stijn, 2012. "University selectivity and earnings: Evidence from UK data on applications and admissions to university," Economics of Education Review, Elsevier, vol. 31(3), pages 96-107.

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