Working Paper: NBER ID: w19053
Authors: Philip Oreopoulos; Uros Petronijevic
Abstract: Recent stories of soaring student debt levels and under-placed college graduates have caused some to question whether a college education is still a sound investment. In this paper, we review the literature on the returns to higher education in an attempt to determine who benefits from college. Despite the tremendous heterogeneity across potential college students, we conclude that the investment appears to payoff for both the average and marginal student. During the past three decades in particular, the earnings premium associated with a college education has risen substantially. Beyond the pecuniary benefits of higher education, we suggest that there also may exist non-pecuniary benefits. Given these findings, it is perhaps surprising that among recent cohorts college completion rates have stagnated. We discuss potential explanations for this trend and conclude by succinctly interpreting the evidence on how to make the most out of college.
Keywords: Higher Education; Returns to Education; College Completion
JEL Codes: I21; J24
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Technological changes (O33) | Demand for skilled workers (J24) |
| College degree (I23) | Higher average lifetime earnings (J31) |
| Program of study and occupational choices (J24) | Returns to college education (I26) |
| Marginal students attending college (D29) | Returns to college education (I26) |
| College completion and quality of institution (I23) | Economic returns to education (I26) |
| College attendance (I23) | Nonpecuniary benefits (J32) |
| College attendance (I23) | Earnings (J31) |