Marginal College Wage Premiums Under Selection into Employment

70 Pages Posted: 22 Jun 2020

See all articles by Matthias Westphal

Matthias Westphal

University of Duisburg-Essen

Daniel Kamhöfer

University of Duisburg-Essen

Hendrik Schmitz

University of Paderborn - Department of Economics

Abstract

In this paper, we identify female long-term wage returns to college education using the educational expansion between 1960–1990 in West Germany as exogenous variation for college enrollment. We estimate marginal treatment effects to learn about the underlying behavioral structure of women who decide for or against going to college (e.g., whether there is selection into gains). We propose a simple partial identification technique using an adjusted version of the Lee bounds to account for women who select into employment due to having a college education, which we call college-induced selection into employment (CISE). We find that women are, on average, more than 17 percentage points more likely to be employed due to having a college education than without. Taking this CISE into account, we find wage returns of 6–12 percent per year of education completed (average treatment effects on the treated).

Keywords: returns to higher education, partial identification, marginal treatment effect, female labor force participation

JEL Classification: C31, I26, J24

Suggested Citation

Westphal, Matthias and Kamhöfer, Daniel and Schmitz, Hendrik, Marginal College Wage Premiums Under Selection into Employment. IZA Discussion Paper No. 13382, Available at SSRN: https://ssrn.com/abstract=3631593

Matthias Westphal (Contact Author)

University of Duisburg-Essen ( email )

Lotharstrasse 1
Duisburg, 47048
Germany

Daniel Kamhöfer

University of Duisburg-Essen ( email )

Lotharstrasse 1
Duisburg, 47048
Germany

Hendrik Schmitz

University of Paderborn - Department of Economics ( email )

Warburger Str. 100
D-33098 Paderborn
Germany

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