Estimating the Payoff to Attending a More Selective College: An Application of Selection on Observables and Unobservables
There are many estimates of the effect of college quality on students' subsequent earnings. One difficulty interpreting past estimates, however, is that elite colleges admit students, in part, based on characteristics that are related to their earnings capacity. Since some of these characteristics are unobserved by researchers who later estimate wage equations, it is difficult to parse out the effect of attending a selective college from the students' pre-college characteristics. This paper uses information on the set of colleges at which students were accepted and rejected to remove the effect of unobserved characteristics that influence college admission. Specifically, we match students in the newly colleted College and Beyond (C&B) Data Set who were admitted to and rejected from a similar set of institutions, and estimate fixed effects models. As another approach to adjust for selection bias, we control for the average SAT score of the schools to which students applied using both the C&B and National Longitudinal Survey of the High School Class of 1972. We find that students who attended more selective colleges do not earn more than other students who were accepted and rejected by comparable schools but attended less selective colleges. However, the average tuition charged by the school is significantly related to the students' subsequent earnings. Indeed, we find a substantial internal rate of return from attending a more costly college. Lastly, the payoff to attending an elite college appears to be greater for students from more disadvantaged family backgrounds.
|Date of creation:||Aug 1999|
|Date of revision:|
|Publication status:||published as Dale, Stacy Berg and Alan B. Krueger. "Estimating The Payoff Of Attending A More Selective College: An Application Of Selection On Observables And Unobservables," Quarterly Journal of Economics, 2002, v107(4,Nov), 1491-1527.|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
Web page: http://www.nber.org
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.:
- Daniel, K. & Black, D. & Smith, J., 1997.
"College Quality and the Wages of Young Men,"
UWO Department of Economics Working Papers
9707, University of Western Ontario, Department of Economics.
- Berhman, J-R & Kletzer, L & Constantine, J & McPherson, M & Schapiro, M-O, 1996. "The Impact of College Quality on Wages : Are There Differences Among Demographic Groups?," Williams Project on the Economics of Higher Education DP-38, Department of Economics, Williams College.
- Heckman, James J, 1979.
"Sample Selection Bias as a Specification Error,"
Econometric Society, vol. 47(1), pages 153-61, January.
- Dominic J. Brewer & Eric Eide & Ronald G. Ehrenberg, 1996. "Does It Pay To Attend An Elite Private College? Cross Cohort Evidence on the Effects of College Quality on Earnings," NBER Working Papers 5613, National Bureau of Economic Research, Inc.
- van der Klaauw, Wilbert, 1997. "A Regression-Discontinuity Evaluation of the Effect of Financial Aid Offers on College Enrollment," Working Papers 97-10, C.V. Starr Center for Applied Economics, New York University.
- 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.
- Griliches, Zvi, 1979. "Sibling Models and Data in Economics: Beginnings of a Survey," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages S37-64, October.
- Gordon C. Winston & Yen, I.C., 1995. "Costs, Prices, Subsidies, and Aid in U.S. Higher Education," Williams Project on the Economics of Higher Education DP-32, Department of Economics, Williams College.
- Behrman, Jere R & Rosenzweig, Mark R & Taubman, Paul, 1996. "College Choice and Wages: Estimates Using Data on Female Twins," The Review of Economics and Statistics, MIT Press, vol. 78(4), pages 672-85, November.
- Terence J. Wales, 1973. "The Effect of College Quality on Earnings: Results from the N B E R-Thorndike Data," Journal of Human Resources, University of Wisconsin Press, vol. 8(3), pages 306-317.
When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:7322. 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: ()
If references are entirely missing, you can add them using this form.