IDEAS home Printed from https://ideas.repec.org/a/eee/pubeco/v218y2023ics0047272722001980.html
   My bibliography  Save this article

The returns to an additional year of education for college graduates

Author

Listed:
  • Gong, Jie
  • Pan, Jessica

Abstract

This paper estimates the returns to an additional year of advanced undergraduate education among students who would otherwise graduate with a bachelor’s degree using administrative student records merged with survey data on earnings from the largest public university in Singapore. We use a regression discontinuity design that exploits the fact that in some faculties, enrollment in the fourth (honors) year is governed by a grade-based eligibility rule. Students with average grades in their third year just above the threshold are significantly more likely to complete the fourth year and have higher earnings after graduation relative to students who narrowly missed the grade cutoff. The implied earnings return to the additional year of college is about 12 % six months after graduation. Linked administrative tax data confirm persistent gains in the longer run for at least 4 years after graduation. Moreover, the return remains substantial even after the university lowers the threshold to encourage more students to enroll in the fourth year, suggesting an effect not entirely driven by signaling of student ability.

Suggested Citation

  • Gong, Jie & Pan, Jessica, 2023. "The returns to an additional year of education for college graduates," Journal of Public Economics, Elsevier, vol. 218(C).
  • Handle: RePEc:eee:pubeco:v:218:y:2023:i:c:s0047272722001980
    DOI: 10.1016/j.jpubeco.2022.104796
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0047272722001980
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.jpubeco.2022.104796?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Joseph G. Altonji & Charles R. Pierret, 2001. "Employer Learning and Statistical Discrimination," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(1), pages 313-350.
    2. Alan I. Barreca & Jason M. Lindo & Glen R. Waddell, 2016. "Heaping-Induced Bias In Regression-Discontinuity Designs," Economic Inquiry, Western Economic Association International, vol. 54(1), pages 268-293, January.
    3. Montenegro, Claudio E. & Patrinos, Harry Anthony, 2014. "Comparable estimates of returns to schooling around the world," Policy Research Working Paper Series 7020, The World Bank.
    4. Ben Ost & Weixiang Pan & Douglas Webber, 2018. "The Returns to College Persistence for Marginal Students: Regression Discontinuity Evidence from University Dismissal Policies," Journal of Labor Economics, University of Chicago Press, vol. 36(3), pages 779-805.
    5. Khoo, Pauline & Ost, Ben, 2018. "The effect of graduating with honors on earnings," Labour Economics, Elsevier, vol. 55(C), pages 149-162.
    6. George Psacharopoulos & Harry Anthony Patrinos, 2018. "Returns to investment in education: a decennial review of the global literature," Education Economics, Taylor & Francis Journals, vol. 26(5), pages 445-458, September.
    7. Seth D. Zimmerman, 2014. "The Returns to College Admission for Academically Marginal Students," Journal of Labor Economics, University of Chicago Press, vol. 32(4), pages 711-754.
    8. Fabian Lange, 2007. "The Speed of Employer Learning," Journal of Labor Economics, University of Chicago Press, vol. 25(1), pages 1-35.
    9. McCrary, Justin, 2008. "Manipulation of the running variable in the regression discontinuity design: A density test," Journal of Econometrics, Elsevier, vol. 142(2), pages 698-714, February.
    10. Mark Hoekstra, 2009. "The Effect of Attending the Flagship State University on Earnings: A Discontinuity-Based Approach," The Review of Economics and Statistics, MIT Press, vol. 91(4), pages 717-724, November.
    11. Michael Spence, 1973. "Job Market Signaling," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 87(3), pages 355-374.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Harry A Patrinos & George Psacharopoulos, 2023. "Estimating returns to education: back to the short-cut," Economics Bulletin, AccessEcon, vol. 43(3), pages 1208-1213.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Chu, Yu-Wei Luke & Cuffe, Harold E, 2020. "Do Struggling Students Benefit From Continued Student Loan Access? Evidence From University and Beyond," Working Paper Series 21067, Victoria University of Wellington, School of Economics and Finance.
    2. Paco Martorell & Damon Clark, 2010. "The Signaling Value of a High School Diploma," Working Papers 1248, Princeton University, Department of Economics, Industrial Relations Section..
    3. Georg Graetz, 2021. "On the interpretation of diploma wage effects estimated by regression discontinuity designs," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 54(1), pages 228-258, February.
    4. Michael D. Bloem, 2023. "Impacts of Transfer Admissions Requirements: Evidence from Georgia," Research in Higher Education, Springer;Association for Institutional Research, vol. 64(6), pages 834-861, September.
    5. Graetz, Georg, 2023. "Imperfect signals," Working Paper Series 2023:10, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    6. Daniel Kreisman & Jonathan Smith & Bondi Arifin, 2023. "Labor Market Signaling and the Value of College: Evidence from Resumes and the Truth," Journal of Human Resources, University of Wisconsin Press, vol. 58(6), pages 1820-1849.
    7. Heinesen, Eskil, 2018. "Admission to higher education programmes and student educational outcomes and earnings–Evidence from Denmark," Economics of Education Review, Elsevier, vol. 63(C), pages 1-19.
    8. Jeffrey T. Denning & Benjamin M. Marx & Lesley J. Turner, 2019. "ProPelled: The Effects of Grants on Graduation, Earnings, and Welfare," American Economic Journal: Applied Economics, American Economic Association, vol. 11(3), pages 193-224, July.
    9. Beuermann, Diether W. & Bottan, Nicolas L. & Hoffmann, Bridget & Jackson, C. Kirabo & Vera-Cossio, Diego, 2024. "Does education prevent job loss during downturns? Evidence from exogenous school assignments and COVID-19 in Barbados," European Economic Review, Elsevier, vol. 162(C).
    10. Salim Atay & Gunes A. Asik & Semih Tumen, 2024. "Impact of Graduating with Honours on Entry Wages of Economics Majors," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 86(3), pages 606-640, June.
    11. Paco Martorell & Damon Clark, 2010. "The Signaling Value of a High School Diploma," Working Papers 1248, Princeton University, Department of Economics, Industrial Relations Section..
    12. Bordón, Paola & Braga, Breno, 2020. "Employer learning, statistical discrimination and university prestige," Economics of Education Review, Elsevier, vol. 77(C).
    13. Nicolás de Roux & Evan Riehl, 2019. "Isolating Peer Effects in the Returns to College Selectivity," Documentos CEDE 17413, Universidad de los Andes, Facultad de Economía, CEDE.
    14. Nakabayashi, Masaki, 2011. "Schooling, employer learning, and internal labor market effect: Wage dynamics and human capital investment in the Japanese steel industry, 1930-1960s," MPRA Paper 30597, University Library of Munich, Germany.
    15. Theodore Koutmeridis, 2013. "The Market for "Rough Diamonds": Information, Finance and Wage Inequality," CDMA Working Paper Series 201307, Centre for Dynamic Macroeconomic Analysis, revised 14 Oct 2013.
    16. Hani Mansour, 2012. "Does Employer Learning Vary by Occupation?," Journal of Labor Economics, University of Chicago Press, vol. 30(2), pages 415-444.
    17. Jed DeVaro & Michael Waldman, 2012. "The Signaling Role of Promotions: Further Theory and Empirical Evidence," Journal of Labor Economics, University of Chicago Press, vol. 30(1), pages 91-147.
    18. Seth D. Zimmerman, 2019. "Elite Colleges and Upward Mobility to Top Jobs and Top Incomes," American Economic Review, American Economic Association, vol. 109(1), pages 1-47, January.
    19. Philip Oreopoulos, 2021. "What Limits College Success? A Review and Further Analysis of Holzer and Baum's Making College Work," Journal of Economic Literature, American Economic Association, vol. 59(2), pages 546-573, June.
    20. Lars Kirkebøen & Edwin Leuven & Magne Mogstad, 2014. "Field of Study, Earnings, and Self-Selection," NBER Working Papers 20816, National Bureau of Economic Research, Inc.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:pubeco:v:218:y:2023:i:c:s0047272722001980. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/505578 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.