Working Paper: NBER ID: w5613
Authors: Dominic J. Brewer; Eric Eide; Ronald G. Ehrenberg
Abstract: While there is evidence of a substantial and rising labor market premium associated with college attendance, little is known about how this premium varies across institutions of different quality and across time. Previous research which has estimated the return to college quality has not taken into account that individuals likely select the type of college they attend based in part on the expected economic return and net costs. In this paper we explicitly model high school students' choice of college type (characterized by quality and control) based on individual and family characteristics (including ability and parental economic status), and an estimate of the net costs of attendance and expected labor market return. We estimate selectivity corrected outcome equations, using data from both the National Longitudinal Study of the High School Class of 1972 and High School and Beyond, which permit us to determine the effects of college quality on wages and earnings and how this effect varies across time. Even after controlling for selection effects there is strong evidence of significant economic return to attending an elite private institution, and some evidence that this premium has increased over time.
Keywords: college quality; earnings; labor market outcomes
JEL Codes: I23; J31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| College quality (I23) | Labor market outcomes (J48) |
| Attending an elite private college (I23) | Economic return (E25) |
| Attending a bottom-rated public institution (I23) | Economic return (E25) |
| Cohorts graduating in the 1980s (I21) | Economic returns to elite private colleges (D29) |
| College choice (I23) | Labor market outcomes (J48) |
| Individual characteristics, net costs, and expected labor market returns (J39) | College choice (I23) |