The Returns to Elite College Education: A Quasi-Experimental Analysis

66 Pages Posted: 25 Oct 2016

See all articles by Massimo Anelli

Massimo Anelli

Bocconi University; CESifo; IZA; Bocconi University - DONDENA - Carlo F. Dondena Centre for Research on Social Dynamics; Fondazione Rodolfo DeBenedetti

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Date Written: September 20, 2016

Abstract

I take advantage of a sharp discontinuity in the probability of admission to an elite university at the admission score threshold, to estimate causal returns to college education quality. I use a newly constructed dataset, which combines individual administrative records about high school, college admission, college attendance and tax returns. Students with score just above the admission threshold have 52% higher yearly income with respect to just-below-threshold students. This premium is equivalent to a jump from the 44th percentile to the 74th percentile of the income distribution. The richness of the data allows me to explore the counterfactual college career of not admitted students and the potential mechanisms underlying the estimated income premium. I find that students with a just-above-threshold score are less likely to be college dropouts, take six fewer months to graduate, choose different majors and are more likely to have income in the top quartile of the distribution. Cumulated over fifteen years, the time span of income data for my sample, the net premium of attending the elite university amounts to around $120,000.

Keywords: education quality, returns to education, human capital

JEL Classification: I210, I220, I230, I280, J240, J310

Suggested Citation

Anelli, Massimo, The Returns to Elite College Education: A Quasi-Experimental Analysis (September 20, 2016). CESifo Working Paper Series No. 6076, Available at SSRN: https://ssrn.com/abstract=2858824

Massimo Anelli (Contact Author)

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Bocconi University - DONDENA - Carlo F. Dondena Centre for Research on Social Dynamics ( email )

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