RT Journal Article SR Electronic T1 Interpreting Degree Effects in the Returns to Education JF Journal of Human Resources JO J Hum Resour FD University of Wisconsin Press SP 439 OP 467 DO 10.3368/jhr.45.2.439 VO 45 IS 2 A1 Alfonso Flores-Lagunes A1 Audrey Light YR 2010 UL http://jhr.uwpress.org/content/45/2/439.abstract AB 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.