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Does It Pay To Attend An Elite Private College? Cross Cohort Evidence on the Effects of College Quality on Earnings

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Author Info
Dominic J. Brewer
Eric Eide
Ronald G. Ehrenberg

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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.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 5613.

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Date of creation: Jun 1996
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Handle: RePEc:nbr:nberwo:5613

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J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

References listed on IDEAS
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.:

  1. Levy, Frank & Murnane, Richard J, 1992. "U.S. Earnings Levels and Earnings Inequality: A Review of Recent Trends and Proposed Explanations," Journal of Economic Literature, American Economic Association, vol. 30(3), pages 1333-81, September. [Downloadable!] (restricted)
  2. 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.
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  3. Heckman, James J, 1979. "Sample Selection Bias as a Specification Error," Econometrica, Econometric Society, vol. 47(1), pages 153-61, January. [Downloadable!] (restricted)
  4. Ehrenberg, Ronald G. & Brewer, Dominic J., 1994. "Do school and teacher characteristics matter? Evidence from High School and Beyond," Economics of Education Review, Elsevier, vol. 13(1), pages 1-17, March. [Downloadable!] (restricted)
  5. Loury, Linda Datcher & Garman, David, 1995. "College Selectivity and Earnings," Journal of Labor Economics, University of Chicago Press, vol. 13(2), pages 289-308, April. [Downloadable!] (restricted)
  6. Fox, Marc, 1993. "Is it a good investment to attend an elite private college?," Economics of Education Review, Elsevier, vol. 12(2), pages 137-151, June. [Downloadable!] (restricted)
  7. Joseph Gyourko & Joseph Tracy, 1986. "An Analysis of Public and Private Sector Wages Allowing for Endogenous Choices of Both Government and Union Status," NBER Working Papers 1920, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  8. James, Estelle, et al, 1989. "College Quality and Future Earnings: Where Should You Send Your Child to College?," American Economic Review, American Economic Association, vol. 79(2), pages 247-52, May. [Downloadable!] (restricted)
  9. Lewis C. Solomon, 1975. "The Definition of College Quality and Its Impact on Earnings," NBER Chapters, in: Explorations in Economic Research, Volume 2, number 4, pages 89-139 National Bureau of Economic Research, Inc. [Downloadable!]
  10. Robert J. Willis & Sherwin Rosen, 1980. "Education and Self-Selection," NBER Working Papers 0249, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  11. Lewis C. Solmon, 1973. "The Definition and Impact of College Quality," NBER Working Papers 0007, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  12. Trost, Robert P & Lee, Lung-Fei, 1984. "Technical Training and Earnings: A Polychotomous Choice Model with Selectivity," The Review of Economics and Statistics, MIT Press, vol. 66(1), pages 151-56, February. [Downloadable!] (restricted)
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  1. David Card & Alan B. Krueger, 2004. "Would the Elimination of Affirmative Action Affect Highly Qualified Minority Applicants? Evidence from California and Texas," NBER Working Papers 10366, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Betts, Julian & Ferrall, Christopher & Finnie, Ross, 2007. "The Role of University Characteristics in Determining Post-graduation Outcomes: Panel Evidence from Three Recent Canadian Cohorts," Analytical Studies Branch Research Paper Series 2007292e, Statistics Canada, Analytical Studies Branch. [Downloadable!]
    Other versions:
  3. Mariana Alfonso & Juan Carlos Calcagno, 2007. "Minority Enrollments at Public Universities of Diverse Selectivity Levels under Different Admission Regimes: The Case of Texas," RES Working Papers 4542, Inter-American Development Bank, Research Department. [Downloadable!]
  4. Alberto Chong & José Galdo, 2006. "Does the Quality of Training Programs Matter? Evidence from Bidding Processes Data," RES Working Papers 4451, Inter-American Development Bank, Research Department. [Downloadable!]
    Other versions:
  5. Stacy Berg Dale & Alan Krueger, 1998. "Estimating the Payoff to Attending a More Selective College: An Application of Selection on Observables and Unobservables," Working Papers 788, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
    Other versions:
  6. Audrey Light & Wayne Strayer, 2003. "Who Receives the College Wage Premium? Assessing the Labor Market Returns to Degrees and College Transfer Patterns," Working Papers 03-02, Ohio State University, Department of Economics. [Downloadable!]
  7. Kerwin Kofi Charles & Ming-Ching Luoh, 2002. "Gender Differences in Completed Schooling," NBER Working Papers 9028, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  8. Michael J. Rizzo & Ronald G. Ehrenberg, 2003. "Resident and Nonresident Tuition and Enrollment at Flagship State Universities," NBER Working Papers 9516, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  9. Mariana Alfonso & Juan Carlos Calcagno, 2007. "Matriculación de minorías en universidades públicas de selectividad diversa, bajo distintos regímenes de admisión: El caso de Texas," RES Working Papers 4543, Inter-American Development Bank, Research Department. [Downloadable!]
  10. Eliasson, Kent, 2006. "How Robust is the Evidence on the Returns to College Choice? Results Using Swedish Administrative Data," UmeÃ¥ Economic Studies 692, Umeå University, Department of Economics. [Downloadable!]
  11. Christopher Avery & Caroline M. Hoxby, 2003. "Do and Should Financial Aid Packages Affect Students' College Choices?," NBER Working Papers 9482, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  12. Dan A. Black & Jeffrey Smith, 2003. "How Robust is the Evidence on the Effects of College Quality? Evidence From Matching," University of Western Ontario, CIBC Human Capital and Productivity Project Working Papers 20033, University of Western Ontario, CIBC Human Capital and Productivity Project. [Downloadable!]
    Other versions:
  13. Eliasson, Kent, 2006. "The Role of Ability in Estimating the Returns to College Choice: New Swedish Evidence," UmeÃ¥ Economic Studies 691, Umeå University, Department of Economics. [Downloadable!]
  14. David Levine, 1999. "Choosing the Right Parents: Changes in the Intergenerational Transmission of Inequality Between the 1970s and the early 1990s," Institute for Research on Labor and Employment, Working Paper Series 1008, Institute of Industrial Relations, UC Berkeley. [Downloadable!]
    Other versions:
  15. Wiji Arulampalam & Robin A. Naylor & Jeremy Smith, 2005. "Doctor Who? Who Gets Admission Offers in UK Medical Schools," IZA Discussion Papers 1775, Institute for the Study of Labor (IZA). [Downloadable!]
  16. Betts, Julian & Ferrall, Christopher & Finnie, Ross, 2007. "L'incidence des caractéristiques d'une université sur les résultats professionnels après le diplôme : témoignages de trois cohortes canadiennes récemment diplômées," Direction des études analytiques : documents de recherche 2007292f, Statistics Canada, Direction des études analytiques. [Downloadable!]
  17. Scott E. Carrell & Richard L. Fullerton & James E. West, 2008. "Does Your Cohort Matter? Measuring Peer Effects in College Achievement," NBER Working Papers 14032, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  18. Alexandre, Fernando & Portela, Miguel & Sá, Carla, 2008. "Admission Conditions and Graduates' Employability," IZA Discussion Papers 3530, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  19. Eliasson, Kent, 2006. "College Choice And Earnings Among University Graduates In Sweden," UmeÃ¥ Economic Studies 693, Umeå University, Department of Economics. [Downloadable!]
  20. Manuel Salas Velasco, 2004. "Rendimientos privados de las inversiones en educación superior a partir de ecuaciones de ingresos," Hacienda Pública Española, IEF, vol. 169(2), pages 87-117, June. [Downloadable!]
  21. Brezis, Elise S., 2008. "Is Privatization Necessary to achieve Quality of Universities?," MPRA Paper 12485, University Library of Munich, Germany. [Downloadable!]
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