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Is There a Devaluation of Degrees? Unobserved Heterogeneity in Returns to Education and Early Experience

Author

Listed:
  • Argan, Damiano

    (LUISS Guido Carli University)

  • Gary-Bobo, Robert J.

    (University of Paris 1 Panthéon-Sorbonne)

  • Goussé, Marion

    (CREST)

Abstract

We study how the returns to higher education evolved in France during a period of educational expansion. We study possible changes in the mix of unobservable characteristics of the graduate population. Using a finite mixture model with latent types, we estimate type-specific log-wage, experience accumulation, and education-choice equations. We find that expected real wages declined for higher-education degrees, and that this result is not driven by adverse selection. Returns to education and experience decreased for certain unobserved types but increased for others. The composition of types among Master’s graduates suggests improved student selection over time, despite rising graduate numbers.

Suggested Citation

  • Argan, Damiano & Gary-Bobo, Robert J. & Goussé, Marion, 2025. "Is There a Devaluation of Degrees? Unobserved Heterogeneity in Returns to Education and Early Experience," IZA Discussion Papers 18053, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp18053
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    Keywords

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    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • 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

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