Returns to Education Quality for Low-Skilled Students: Evidence from a Discontinuity

Abstract

This paper studies the labor market returns to quality of higher education for low-skilled students. Using a regression discontinuity design, we compare students who marginally pass and marginally fail the French high school exit exam from the first attempt. Threshold crossing leads to an improvement in the quality, but has no effect on the quantity of higher education pursued. Specifically, students who marginally pass are more likely to enroll in STEM majors and universities with better peers. Marginally passing also increases earnings by 12.5 percent at the age of 27 to 29. Our findings show that low-skilled students experience large gains from having the opportunity to access higher quality postsecondary education.

Keywords: Quality of education, returns to education, regression discontinuity design

JEL Classification: H52, I21, I28, J24