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Quantile Treatment Effects of College Quality on Earnings: Evidence from Administrative Data in Texas

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  • Rodney J. Andrews
  • Jing Li
  • Michael F. Lovenheim

Abstract

This paper uses administrative data on schooling and earnings from Texas to estimate the effect of college quality on the distribution of earnings. We proxy college quality using the college sector from which students graduate and focus on identifying how graduating from UT-Austin, Texas A\&M or a community college affects the distribution of earnings relative to graduating from a non-flagship university in Texas. Our methodological approach uses the rich set of observable student academic ability and background characteristics in the data to adjust the earnings distributions across college sectors for the fact that college sector quality is correlated with factors that also affect earnings. Although our mean earnings estimates are similar to previous work in this area, we find evidence of substantial heterogeneity in the returns to college quality. At UT-Austin, the returns increase across the earnings distribution, while at Texas A\&M they tend to decline with one's place in the distribution. For community college graduates, the returns relative to non-flagship four-year graduates are negative across most of the distribution of earnings, but they approach zero and become positive for higher earners. Our data also allow us to estimate effects separately by race and ethnicity, and we find that historically under-represented minorities experience the highest returns in the upper tails of the earnings distribution, particularly among UT-Austin and community college graduates. While we focus on graduates, we also show our estimates are robust to examining college attendees as well as to many other changes in the sample and to the estimation strategy. Overall, these estimates provide the first direct evidence of the extent of heterogeneity in the effect of college quality on subsequent earnings, and our estimates point to the need to consider such heterogeneity in human capital models that incorporate college quality.

Suggested Citation

  • Rodney J. Andrews & Jing Li & Michael F. Lovenheim, 2012. "Quantile Treatment Effects of College Quality on Earnings: Evidence from Administrative Data in Texas," NBER Working Papers 18068, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:18068
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Rajeev Darolia & Cory Koedel & Paco Martorell & Katie Wilson & Francisco Perez‐Arce, 2015. "Do Employers Prefer Workers Who Attend For‐Profit Colleges? Evidence from a Field Experiment," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 34(4), pages 881-903, September.
    2. Cunha, Jesse M. & Miller, Trey, 2014. "Measuring value-added in higher education: Possibilities and limitations in the use of administrative data," Economics of Education Review, Elsevier, vol. 42(C), pages 64-77.
    3. Mark Hoekstra & Pierre Mouganie & Yaojing Wang, 2016. "Peer Quality and the Academic Benefits to Attending Better Schools," NBER Working Papers 22337, National Bureau of Economic Research, Inc.
    4. Tatyana Deryugina & Olga Shurchkov, 2015. "Does Beauty Matter In Undergraduate Education?," Economic Inquiry, Western Economic Association International, vol. 53(2), pages 940-961, April.
    5. Grey Gordon & Aaron Hedlund, 2017. "Accounting for the Rise in College Tuition," NBER Chapters,in: Education, Skills, and Technical Change: Implications for Future US GDP Growth National Bureau of Economic Research, Inc.
    6. Animesh Giri & Vinish Shrestha, 2016. "Schooling Infrastructure and Female Educational Outcomes in Nepal," Working Papers 2016-18, Towson University, Department of Economics, revised Oct 2016.
    7. Andrews, Rodney & Li, Jing & Lovenheim, Michael F., 2014. "Heterogeneous paths through college: Detailed patterns and relationships with graduation and earnings," Economics of Education Review, Elsevier, vol. 42(C), pages 93-108.
    8. C. Kirabo Jackson & Rucker Johnson & Claudia Persico, 2014. "The Effect of School Finance Reforms on the Distribution of Spending, Academic Achievement, and Adult Outcomes," NBER Working Papers 20118, National Bureau of Economic Research, Inc.
    9. Aaron Hedlund & Grey Gordon, 2017. "Accounting for Tuition Increases at U.S. Colleges," 2017 Meeting Papers 1550, Society for Economic Dynamics.
    10. Zeidenberg, Matthew & Scott, Marc & Belfield, Clive, 2015. "What about the non-completers? The labor market returns to progress in community college," Economics of Education Review, Elsevier, vol. 49(C), pages 142-156.
    11. Jonathan Smith & Kevin Stange, 2016. "A New Measure of College Quality to Study the Effects of College Sector and Peers on Degree Attainment," Education Finance and Policy, MIT Press, vol. 11(4), pages 369-403, Fall.
    12. Liu, Vivian Y.T. & Belfield, Clive R. & Trimble, Madeline J., 2015. "The medium-term labor market returns to community college awards: Evidence from North Carolina," Economics of Education Review, Elsevier, vol. 44(C), pages 42-55.
    13. Lovenheim, Michael F. & Owens, Emily G., 2014. "Does federal financial aid affect college enrollment? Evidence from drug offenders and the Higher Education Act of 1998," Journal of Urban Economics, Elsevier, vol. 81(C), pages 1-13.
    14. Michael F. Lovenheim & C. Lockwood Reynolds, 2013. "The Effect of Housing Wealth on College Choice: Evidence from the Housing Boom," Journal of Human Resources, University of Wisconsin Press, vol. 48(1), pages 1-35.
    15. Bruce, Donald J. & Carruthers, Celeste K., 2014. "Jackpot? The impact of lottery scholarships on enrollment in Tennessee," Journal of Urban Economics, Elsevier, vol. 81(C), pages 30-44.

    More about this item

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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