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Heterogeneous Economic Returns to Post-Secondary Degrees: Evidence from Chile

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  • Jorge Rodríguez
  • Sergio Urzúa
  • Loreto Reyes

Abstract

We analyze the economic returns to post-secondary degrees in Chile. We posit a schooling decision model with unobserved ability, degree-specific tuition costs, and earnings. We use administrative records to carry out our empirical analysis. Our results show positive average returns to post-secondary education, especially for five-year degrees. However, we also uncover significant heterogeneity. We document how unobserved characteristics (ability) determine the economic benefits of first- and second-best choices, even leading to negative returns to post-secondary degrees. Our findings illustrate the importance of allowing for heterogeneous treatment effects and individuals’ choices when examining the returns to education.

Suggested Citation

  • Jorge Rodríguez & Sergio Urzúa & Loreto Reyes, 2016. "Heterogeneous Economic Returns to Post-Secondary Degrees: Evidence from Chile," Journal of Human Resources, University of Wisconsin Press, vol. 51(2), pages 416-460.
  • Handle: RePEc:uwp:jhriss:v:51:y:2016:i:2:p:416-460
    Note: DOI: 10.3368/jhr.51.2.0213-5474R1
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    References listed on IDEAS

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    2. Ricardo Nogales & Pamela Córdova & Manuel Urquidi, 2020. "The impact of university reputation on employment opportunities: Experimental evidence from Bolivia," The Economic and Labour Relations Review, , vol. 31(4), pages 524-542, December.
    3. Gordon B. Dahl & Dan-Olof Rooth & Anders Stenberg, 2020. "Long-Run Returns to Field Study in Secondary School," CESifo Working Paper Series 8462, CESifo.
    4. Yoshimichi Murakami & Tomokazu Nomura, 2021. "Decline in Values of Degrees and Recent Evolution of Wage Inequality: Evidence from Chile," Discussion Paper Series DP2021-09, Research Institute for Economics & Business Administration, Kobe University, revised Mar 2022.
    5. Gordon Dahl & Dan-Olof Rooth & Anders Stenberg, 2020. "High School Majors, Comparative (Dis)Advantage, and Future Earnings," NBER Working Papers 27524, National Bureau of Economic Research, Inc.
    6. Jorge Rodríguez & Fernando Saltiel & Sergio Urzúa, 2022. "Dynamic treatment effects of job training," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 37(2), pages 242-269, March.
    7. Adriana Camacho & Julián Messina & Juan Pablo Uribe, 2017. "The Expansion of Higher Education in Colombia: Bad Students or Bad Programs?," Documentos CEDE 015352, Universidad de los Andes – Facultad de Economía – CEDE.
    8. Aguirre, Josefa & Matta, Juan, 2021. "Walking in your footsteps: Sibling spillovers in higher education choices," Economics of Education Review, Elsevier, vol. 80(C).
    9. Leonardo Fabio Morales & Christian Posso & Luz A. Flórez, 2021. "Heterogeneity in the Returns to Tertiary Education for the Disadvantage Youth: Quality vs. Quantity Analysis," Borradores de Economia 1150, Banco de la Republica de Colombia.
    10. Ana Maria Montoya & Carlos Noton & Alex Solis, 2017. "Returns to Higher Education: Vocational Education vs College," Documentos de Trabajo 334, Centro de Economía Aplicada, Universidad de Chile.
    11. Alonso Bucarey & Dante Contreras & Pablo Muñoz, 2018. "Labor Market Returns to Student Loans," Working Papers wp464, University of Chile, Department of Economics.
    12. Biewen, Martin & (neé Tapalaga), Madalina Thiele, 2020. "Early tracking, academic vs. vocational training, and the value of ‘second-chance’ options," Labour Economics, Elsevier, vol. 66(C).
    13. Souvik Banerjee & Anirban Basu, 2021. "Estimating Endogenous Treatment Effects Using Latent Factor Models with and without Instrumental Variables," Econometrics, MDPI, vol. 9(1), pages 1-25, March.

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