Student Abilities during the Expansion of U.S. Education, 1950-2000

42 Pages Posted: 18 Jan 2009

See all articles by Lutz Hendricks

Lutz Hendricks

UNC Chapel Hill; CESifo (Center for Economic Studies and Ifo Institute)

Todd Schoellman

Federal Reserve Banks - Federal Reserve Bank of Minneapolis

Date Written: January 16, 2009

Abstract

Since 1950, U.S. educational attainment has increased substantially. While the median student in 1950 dropped out of high school, the median student today attends some college. In an environment with ability heterogeneity and positive sorting between ability and school tenure, the expansion of education implies a decrease in the average ability of students conditional on school attainment. Using a calibrated model of school choice under ability heterogeneity, we investigate the quantitative impact of rising attainment on ability and measured wages. Our findings suggest that the decline in average ability depressed wages conditional on schooling by 31-58 percentage points. We also find that the entire rise in the college wage premium since 1950 can be attributed to the rising mean ability of college graduates relative to high school graduates.

Keywords: Education, Ability, Skill premium

JEL Classification: I2, J24

Suggested Citation

Hendricks, Lutz and Schoellman, Todd, Student Abilities during the Expansion of U.S. Education, 1950-2000 (January 16, 2009). Available at SSRN: https://ssrn.com/abstract=1328897 or http://dx.doi.org/10.2139/ssrn.1328897

Lutz Hendricks (Contact Author)

UNC Chapel Hill ( email )

Chapel Hill, NC 27599
United States

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Todd Schoellman

Federal Reserve Banks - Federal Reserve Bank of Minneapolis ( email )

90 Hennepin Avenue
Minneapolis, MN 55480
United States

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