University quality and graduate wages in the UK
Analysis of higher education quality has become a central issue in light of UK government policies to introduce variable fees and to encourage more and more young people to attend university. In this context, an important question is whether institutional quality is reflected in labour market earnings. Such information could help to inform students, teachers and policy makers. However, empirical analysis of the link between institutional quality and labour market outcomes is rare outside the US. In this study we offer an empirical analysis of labour market returns to measures of institutional quality. We exploit the Graduate Cohort Studies for 1985, 1990, 1995 and 1999. We use data from the Higher Education Statistics Agency to obtain information about institutional quality. We use five different measures of quality: research assessment exercise (RAE) score; the faculty-student ratio; the retention rate; the total tariff score (which is based on A-levels or other eligible qualifications); mean faculty salary and expenditure per pupil. We explore how these variables can be combined to an aggregate proxy for quality. We attempt to control for all other variables that might influence both the quality of institution attended by the graduate and his/her wage. Like all studies in this literature, our analysis relies on an (untestable) assumption that relevant variables have not been omitted. Our key finding is that there is a positive return to attending a higher quality institution for most of the indicators, which is similar to what US studies have found. The earnings differential from attending a higher quality institution is about 6 per cent on average, when using an overall proxy for quality based on a combination of the measures. We also examine whether it makes a difference if an individual attends an institution in the second, third or fourth quartile of the quality distribution, as compared to an institution in the first (lowest) quartile. Results suggest that if a student attends an institution in the highest quartile of the RAE score, the retention rate or the total tariff, this leads to higher wages between 10 percent and 16 percent, compared to an individual who attends an institution in the lowest quartile. However, if an individual attends an institution in the second highest quartile of quality, the earning differential drops to 5-7 percent in comparison to the bottom ranked institutions. We also find that returns to institutional quality have increased over time, though within a modest range. .
|Date of creation:||Mar 2009|
|Contact details of provider:|| Postal: LSE Library Portugal Street London, WC2A 2HD, U.K.|
Phone: +44 (020) 7405 7686
Web page: http://www.lse.ac.uk/
More information through EDIRC
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.:
- Arnaud Chevalier & Gavan Conlon, 2003.
"Does it pay to attend a prestigious university?,"
LSE Research Online Documents on Economics
19477, London School of Economics and Political Science, LSE Library.
- Arnaud Chevalier & Gavan Conlon, 2003. "Does it pay to attend a prestigious university?," Working Papers 200320, School of Economics, University College Dublin.
- Arnaud Chevalier & Gavan Conlon, 2003. "Does it pay to attend a prestigious university?," CEE Discussion Papers 0033, Centre for the Economics of Education, LSE.
- Chevalier, Arnaud & Conlon, Gavan, 2003. "Does It Pay to Attend a Prestigious University?," IZA Discussion Papers 848, Institute for the Study of Labor (IZA).
- 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.
- Dan A. Black & Jeffrey Smith, 2003. "How Robust is the Evidence on the Effects of College Quality? Evidence From Matching," University of Western Ontario, Centre for Human Capital and Productivity (CHCP) Working Papers 20033, University of Western Ontario, Centre for Human Capital and Productivity (CHCP).
- Stacy Berg Dale & Alan B. Krueger, 2002. "Estimating the Payoff to Attending a More Selective College: An Application of Selection on Observables and Unobservables," The Quarterly Journal of Economics, Oxford University Press, vol. 117(4), pages 1491-1527.
- Stacy Berg Dale & Alan B. Krueger, "undated". "Estimating the Payoff to Attending a More Selective College: An Application of Selection on Observables and Unobservables," Mathematica Policy Research Reports 4bafb729911e486baf90b34c9, Mathematica Policy Research.
- Stacy Berg Dale & Alan Krueger, 1998. "Estimating the Payoff to Attending a More Selective College: An Application of Selection on Observables and Unobservables," Working Papers 788, Princeton University, Department of Economics, Industrial Relations Section..
- Stacy Berg Dale & Alan B. Krueger, 1999. "Estimating the Payoff to Attending a More Selective College: An Application of Selection on Observables and Unobservables," NBER Working Papers 7322, National Bureau of Economic Research, Inc.
- 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. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:ehl:lserod:25486. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (LSERO Manager)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.