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Please use this identifier to cite or link to this item: http://arks.princeton.edu/ark:/88435/dsp017m01bk70n
 Title: Estimating the Payoff to Attending a More Selective College: An Application of Selection on Observables and Unobservables Authors: Krueger, Alan B.Dale, Stacy Berg Keywords: return to collegecollege selectivityhuman capital Issue Date: 1-Dec-1998 Series/Report no.: Working Papers (Princeton University. Industrial Relations Section) ; 409 Abstract: There are many estimates of the effect of college quality on students’ subsequent earnings. One difﬁculty interpreting past estimates, however, is that elite colleges admit students, in part, based on characteristics that are related to their earnings capacity. Since some of these characteristics are unobserved by researchers who later estimate wage equations, it is difficult to parse out the effect of attending a selective college from the students‘ pre-college characteristics. This paper uses information on the set of colleges at which students were accepted and rejected to remove the effect of unobserved characteristics that inﬂuence college admission. Speciﬁcally, we match students in the newly collected College and Beyond (C&B) Data Set who were admitted to and rejected from a similar set of institutions, and estimate ﬁxed effects models. As another approach to adjust for selection bias, we control for the average SAT score of the schools to which students applied using both the C&B and National Longitudinal Survey of the High School Class of 1972. We ﬁnd that students who attended more selective colleges do not earn more than other students who were accepted and rejected by comparable schools but attended less selective colleges. However, the average tuition charged by the school is signiﬁcantly related to the students’ subsequent earnings. Indeed, we ﬁnd a substantial internal rate of return from attending a more costly college. Lastly, the payoff to attending an elite college appears to be greater for students from more disadvantaged family backgrounds. URI: http://arks.princeton.edu/ark:/88435/dsp017m01bk70n Appears in Collections: IRS Working Papers

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