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Post‐secondary education in Canada: can ability bias explain the earnings gap between college and university graduates?

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  • Vincenzo Caponi
  • Miana Plesca

Abstract

Using the Canadian General Social Survey we compute returns to post‐secondary education relative to high school. Unlike previous research using Canadian data, our data set allows us to control for ability selection into higher education. We find strong evidence of positive ability selection into all levels of post‐secondary education for men and weaker positive selection for women. Since the ability selection is stronger for higher levels of education, particularly for university, the difference in returns between university and college or trades education decreases slightly after accounting for ability bias. However, a puzzling large gap persists, with university‐educated men still earning over 20% more than men with college or trades education. En utilisant les résultats de l'Enquête sociale générale au Canada, on calcule les rendements sur l'éducation post‐secondaire par rapport à ceux sur l'éducation secondaire. Contrairement aux travaux antérieurs sur les données canadiennes, les données utilisées ici permettent de tenir compte des différentiels d'habileté. Les résultats révèlent un fort différentiel positif d’habileté pour les hommes à tous les niveaux de l'éducation post‐secondaire, et un moindre différentiel pour les femmes. Puisque ce différentiel est plus fort pour les plus hauts niveaux d'éducation, particulièrement pour l'université, la différence de rendements entre universités et collèges ou écoles de métiers décroît quand on tient compte du différentiel d'habileté. Cependant un large écart résiduel demeure et laisse perplexe : les hommes avec une éducation universitaire gagnent encore plus de 20% de plus que ceux qui ont fréquenté les collèges et les écoles de métiers après normalisation pour le niveau d'habileté.

Suggested Citation

  • Vincenzo Caponi & Miana Plesca, 2009. "Post‐secondary education in Canada: can ability bias explain the earnings gap between college and university graduates?," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 42(3), pages 1100-1131, August.
  • Handle: RePEc:wly:canjec:v:42:y:2009:i:3:p:1100-1131
    DOI: 10.1111/j.1540-5982.2009.01540.x
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    Cited by:

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    2. Kelly Foley, 2019. "The gender gap in university enrolment: Do parents play a role beyond investing in skills?," Canadian Journal of Economics, Canadian Economics Association, vol. 52(2), pages 441-489, May.
    3. Alessandrini, Diana, 2018. "Is post-secondary education a safe port and for whom? Evidence from Canadian data," Economics of Education Review, Elsevier, vol. 67(C), pages 1-13.
    4. Paweł Strawiński, 2009. "Efekt zewnętrzny wykształcenia," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 5-6, pages 39-60.
    5. Strawinski, Pawel, 2008. "External Return to Education in Poland," MPRA Paper 11598, University Library of Munich, Germany.
    6. Celeste K. Carruthers & Christopher Jepsen, 2020. "Vocational Education: An International Perspective," CESifo Working Paper Series 8718, CESifo.
    7. Strawinski, Pawel, 2007. "Changes In Return To Higher Education In Poland 1998-2004," MPRA Paper 5185, University Library of Munich, Germany.
    8. Luiza Antonie & Miana Plesca & Jennifer Teng, 2016. "Heterogeneity in the Gender Wage Gap in Canada," Working Papers 1603, University of Guelph, Department of Economics and Finance.
    9. NAKABAYASHI, Masaki, 2011. "Acquired Skills and Learned Abilities: Wage Dynamics of Blue-collar Workers in Internal Labor Markets," ISS Discussion Paper Series (series F) f153, Institute of Social Science, The University of Tokyo, revised Apr 2012.
    10. Wen Fan, 2012. "Estimating the Return to College in Britain Using Regression and Propensity Score Matching," LABOUR, CEIS, vol. 26(1), pages 31-45, March.
    11. Sylvain Dessy & Safa Ragued, 2013. "Whither the Progressive Tax?," Cahiers de recherche 1340, CIRPEE.
    12. Moeeni, Safoura & Wei, Feng, 2022. "The labor market returns to unobserved skills: Evidence from a gender quota," CLEF Working Paper Series 53, Canadian Labour Economics Forum (CLEF), University of Waterloo.
    13. Strawinski, Pawel, 2008. "Changes in return to higher education in Poland 1998-2005," MPRA Paper 9533, University Library of Munich, Germany.

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    More about this item

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • I2 - Health, Education, and Welfare - - Education
    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models

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