Please use this identifier to cite or link to this item: http://arks.princeton.edu/ark:/88435/dsp01qj72p717z

 Title: "Interpreting Sheepskin Effects in the Returns to Education" Authors: Flores-Lagunes, AlfonsoLight, Audrey Issue Date: Mar-2007 Series/Report no.: 22 Abstract: Researchers often identify sheepskin effects by including degree attainment (D) and years of schooling (S) in a wage model, yet the source of independent variation in these measures is not well understood. We argue that S is negatively correlated with ability among degree-holders because the most able graduate the fastest, while a negative correlation exists among dropouts because the most able benefit from increased schooling. Using data from the NLSY79, we find that wages decrease with S among degree-holders and increase with S among dropouts. The independent variation in S and D needed for identification is not due to reporting error. Instead, we conclude that skill varies systematically among individuals with a given degree status. URI: http://arks.princeton.edu/ark:/88435/dsp01qj72p717z Appears in Collections: ERS Working Papers

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