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Research ArticleArticles

Interpreting Degree Effects in the Returns to Education

Alfonso Flores-Lagunes and Audrey Light
Journal of Human Resources, March 2010, 45 (2) 439-467; DOI: https://doi.org/10.3368/jhr.45.2.439
Alfonso Flores-Lagunes
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Audrey Light
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Abstract

Researchers often identify degree 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, but positively correlated among dropouts because the most able benefit from increased schooling. Using NLSY79 data, we find support for this argument; our findings also suggest that highest grade completed is the preferred measure of S for dropouts, while age at school exit is a more informative measure for degree-holders.

  • Received August 2008.
  • Accepted February 2009.
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Journal of Human Resources
Vol. 45, Issue 2
1 Mar 2010
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Interpreting Degree Effects in the Returns to Education
Alfonso Flores-Lagunes, Audrey Light
Journal of Human Resources Mar 2010, 45 (2) 439-467; DOI: 10.3368/jhr.45.2.439

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Interpreting Degree Effects in the Returns to Education
Alfonso Flores-Lagunes, Audrey Light
Journal of Human Resources Mar 2010, 45 (2) 439-467; DOI: 10.3368/jhr.45.2.439
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  • Article
    • Abstract
    • I. Introduction
    • II. Schooling Model
    • III. Econometric strategy
    • IV. Data
    • V. Findings
    • VI. Concluding Comments
    • Appendix 1
    • Footnotes
    • References
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