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Trends in Quality-Adjusted Skill Premia in the United States, 1960-2000

  • Carneiro, Pedro

    ()

    (University College London)

  • Lee, Sokbae

    ()

    (Institute for Fiscal Studies, London)

This paper presents new evidence that increases in college enrollment lead to a decline in the average quality of college graduates between 1960 and 2000, resulting in a decrease of 6 percentage points in the college premium. We show that although a standard demand and supply framework can qualitatively account for the trend in the college and age premia over this period, substantial quantitative adjustments still need to be made to account for changes in quality.

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File URL: http://ftp.iza.org/dp5295.pdf
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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5295.

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Length: 72 pages
Date of creation: Oct 2010
Date of revision:
Publication status: published in: American Economic Review, 2011, 110 (6), 2309-2349
Handle: RePEc:iza:izadps:dp5295
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  1. Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 410-42, June.
  2. Bishop, John Hillman, 1989. "Is the Test Score Decline Responsible for the Productivity Growth Decline?," American Economic Review, American Economic Association, vol. 79(1), pages 178-97, March.
  3. Gordon B. Dahl, 2002. "Mobility and the Return to Education: Testing a Roy Model with Multiple Markets," Econometrica, Econometric Society, vol. 70(6), pages 2367-2420, November.
  4. David Card & Thomas Lemieux, 2001. "Can Falling Supply Explain the Rising Return to College for Younger Men? A Cohort-Based Analysis," The Quarterly Journal of Economics, Oxford University Press, vol. 116(2), pages 705-746.
  5. Chay, Kenneth Y. & Lee, David S., 2000. "Changes in relative wages in the 1980s Returns to observed and unobserved skills and black-white wage differentials," Journal of Econometrics, Elsevier, vol. 99(1), pages 1-38, November.
  6. Claudia Olivetti & Barbara Petrongolo, 2005. "Unequal Pay or Unequal employment? A Cross-Country Analysis of Gender Gaps," CEP Discussion Papers dp0711, Centre for Economic Performance, LSE.
  7. Oded Galor & Omer Moav, 2000. "Ability-Biased Technological Transition, Wage Inequality, and Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 115(2), pages 469-497.
  8. Deschenes, Olivier, 2002. "Estimating the Effects of Family Background on the Return to Schooling," University of California at Santa Barbara, Economics Working Paper Series qt2qm3867s, Department of Economics, UC Santa Barbara.
  9. Casey B. Mulligan & Yona Rubinstein, 2008. "Selection, Investment, and Women's Relative Wages Over Time," The Quarterly Journal of Economics, Oxford University Press, vol. 123(3), pages 1061-1110.
  10. Daron Acemoglu, 2000. "Technical Change, Inequality, and the Labor Market," NBER Working Papers 7800, National Bureau of Economic Research, Inc.
  11. Amanda Gosling & Stephen Machin & Costas Meghir, 1994. "The changing distribution of male wages in the UK," IFS Working Papers W94/13, Institute for Fiscal Studies.
  12. Chinhui Juhn & Dae-Il Kim & Francis Vella, 2004. "The Expansion of College Education in the United States: Is There Evidence of Declining Cohort Quality?," Working Papers 2004-02, Department of Economics, University of Houston.
  13. David Card & Alan Krueger, 1990. "Does School Quality Matter? Returns to Education and the Characteristics of Public Schools in the United States," NBER Working Papers 3358, National Bureau of Economic Research, Inc.
  14. Willis, Robert J & Rosen, Sherwin, 1979. "Education and Self-Selection," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages S7-36, October.
  15. Groen, J.A.Jeffrey A., 2004. "The effect of college location on migration of college-educated labor," Journal of Econometrics, Elsevier, vol. 121(1-2), pages 125-142.
  16. Heckman, James & Layne-Farrar, Anne & Todd, Petra, 1996. "Human Capital Pricing Equations with an Application to Estimating the Effect of Schooling Quality on Earnings," The Review of Economics and Statistics, MIT Press, vol. 78(4), pages 562-610, November.
  17. Bound, John & Groen, Jeffrey & Kezdi, G.Gabor & Turner, Sarah, 2004. "Trade in university training: cross-state variation in the production and stock of college-educated labor," Journal of Econometrics, Elsevier, vol. 121(1-2), pages 143-173.
  18. Blundell, Richard & Gosling, Amanda & Ichimura, Hidehiko & Meghir, Costas, 2004. "Changes in the Distribution of Male and Female Wages Accounting for Employment Composition Using Bounds," IZA Discussion Papers 1350, Institute for the Study of Labor (IZA).
  19. Amitabh Chandra, 2003. "Is the Convergence of the Racial Wage Gap Illusory?," NBER Working Papers 9476, National Bureau of Economic Research, Inc.
  20. Caroline M. Hoxby & Bridget Terry, 1999. "Explaining Rising Income and wage Inequality Among the College Educated," NBER Working Papers 6873, National Bureau of Economic Research, Inc.
  21. Lee, Lung-Fei, 1983. "Generalized Econometric Models with Selectivity," Econometrica, Econometric Society, vol. 51(2), pages 507-12, March.
  22. Nicole M. Fortin, 2006. "Higher-Education Policies and the College Wage Premium: Cross-State Evidence from the 1990s," American Economic Review, American Economic Association, vol. 96(4), pages 959-987, September.
  23. Derek Neal, 2004. "The Measured Black-White Wage Gap among Women Is Too Small," Journal of Political Economy, University of Chicago Press, vol. 112(S1), pages S1-S28, February.
  24. Christopher R. Taber, 2001. "The Rising College Premium in the Eighties: Return to College or Return to Unobserved Ability?," Review of Economic Studies, Oxford University Press, vol. 68(3), pages 665-691.
  25. Richard J. Murnane & John B. Willett & Frank Levy, 1995. "The Growing Importance of Cognitive Skills in Wage Determination," NBER Working Papers 5076, National Bureau of Economic Research, Inc.
  26. Keane, Michael & Moffitt, Robert & Runkle, David, 1988. "Real Wages over the Business Cycle: Estimating the Impact of Heterogeneity with Micro Data," Journal of Political Economy, University of Chicago Press, vol. 96(6), pages 1232-66, December.
  27. Carneiro, Pedro & Heckman, James J. & Vytlacil, Edward, 2010. "Estimating Marginal Returns to Education," IZA Discussion Papers 5275, Institute for the Study of Labor (IZA).
  28. Richard Blundell & Howard Reed & Thomas M. Stoker, 2003. "Interpreting Aggregate Wage Growth: The Role of Labor Market Participation," American Economic Review, American Economic Association, vol. 93(4), pages 1114-1131, September.
  29. Meghir, Costas & Whitehouse, Edward, 1996. "The Evolution of Wages in the United Kingdom: Evidence from Micro Data," Journal of Labor Economics, University of Chicago Press, vol. 14(1), pages 1-25, January.
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