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Increasing Returns to Education and Progress towards a College Degree

Author

Listed:
  • Leslie S Stratton

    (Department of Economics, VCU School of Business)

  • James N. Wetzel

    (Department of Economics, VCU School of Business)

Abstract

Returns to college have increased, but graduation rates have changed relatively little. Modifying a human capital model of college enrollment to endogenize time-to-graduation, we predict that higher returns to education will both speed graduation and increase enrollment. Some of those new entrants may, however, take longer to graduate. Using the 1989 and 1995 Beginning Postsecondary Studies, we employ a multinomial logit to model the association between individual and family characteristics, and five-year college outcomes: graduation, continued enrollment, and non-enrollment. Between cohort differences arise either because the characteristics of those entering college are different or because the relations between characteristics and outcomes have changed. We utilize a Oaxaca-Blinder style decomposition to distinguish between these two alternatives, attributing differences in characteristics to newly attracted students and differences in the relations between characteristics and outcomes to historically attracted students behaving differently. It is changes in behavior that explain the increased progress we observe.

Suggested Citation

  • Leslie S Stratton & James N. Wetzel, 2008. "Increasing Returns to Education and Progress towards a College Degree," Working Papers 0805, VCU School of Business, Department of Economics.
    • Handle: RePEc:vcu:wpaper:0805
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    References listed on IDEAS

    as
    1. Stratton, Leslie S. & O'Toole, Dennis M. & Wetzel, James N., 2006. "Are the Factors Affecting Dropout Behavior Related to Initial Enrollment Intensity for College Undergraduates?," IZA Discussion Papers 1951, Institute of Labor Economics (IZA).
    2. Christopher Dougherty, 2005. "Why Are the Returns to Schooling Higher for Women than for Men?," Journal of Human Resources, University of Wisconsin Press, vol. 40(4), pages 969-988.
    3. Susan M. Dynarski, 2003. "Does Aid Matter? Measuring the Effect of Student Aid on College Attendance and Completion," American Economic Review, American Economic Association, vol. 93(1), pages 279-288, March.
    4. Altonji, Joseph G, 1993. "The Demand for and Return to Education When Education Outcomes Are Uncertain," Journal of Labor Economics, University of Chicago Press, vol. 11(1), pages 48-83, January.
    5. Lisa Barrow & Cecilia Elena Rouse, 2005. "Do Returns to Schooling Differ by Race and Ethnicity?," American Economic Review, American Economic Association, vol. 95(2), pages 83-87, May.
    6. Jaeger, David A & Page, Marianne E, 1996. "Degrees Matter: New Evidence on Sheepskin Effects in the Returns to Education," The Review of Economics and Statistics, MIT Press, vol. 78(4), pages 733-740, November.
    7. Shouping Hu & Edward P. St. John, 2001. "Student Persistence in a Public Higher Education System," The Journal of Higher Education, Taylor & Francis Journals, vol. 72(3), pages 265-286, May.
    8. Manski, Charles F., 1989. "Schooling as experimentation: a reappraisal of the postsecondary dropout phenomenon," Economics of Education Review, Elsevier, vol. 8(4), pages 305-312, August.
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    Cited by:

    1. Miki Malul, 2012. "A Dynamic Brain Drain in Peripheral Regions," ERSA conference papers ersa12p230, European Regional Science Association.
    2. Holmgren, Mark & McCracken, Vicki A., 2010. "Identifying Student Success at a Land Grant Institution," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 61701, Agricultural and Applied Economics Association.

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    More about this item

    Keywords

    Higher Education; Graduation Rates; Persistence;
    All these keywords.

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education

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