Returns to Education through Access to Higher-Paying Firms: Evidence from US Matched Employer-Employee Data

8 Pages Posted: 11 Apr 2017

See all articles by Niklas Engbom

Niklas Engbom

New York University (NYU); Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Christian Moser

Columbia University; Federal Reserve Bank of Minneapolis; Centre for Economic Policy Research (CEPR)

Date Written: April 8, 2017

Abstract

What are the sources of the returns to education? We study the allocation of higher education graduates from public institutions in Ohio across firms. We present three results. First, we confirm findings in the earlier literature of large pay differences across degrees. Second, we show that up to one quarter of pay premiums for higher degrees are explained by between-firm pay differences. Third, higher education degrees are associated with greater representation at the best-paying firms. We conclude that employer heterogeneity is an important factor in mediating the returns to education.

Suggested Citation

Engbom, Niklas and Moser, Christian, Returns to Education through Access to Higher-Paying Firms: Evidence from US Matched Employer-Employee Data (April 8, 2017). American Economic Review, Vol. 107, No. 5, 2017, Columbia Business School Research Paper No. 17-46, Available at SSRN: https://ssrn.com/abstract=2948977

Niklas Engbom

New York University (NYU) ( email )

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