Economics of Education Review 19 2000 279–289 www.elsevier.comlocateeconedurev
The returns to individual and college characteristics Evidence from the National Longitudinal Survey of Youth
James Monks
Consortium on Financing Higher Education, Cambridge, MA 02142, USA Received 9 May 1997; accepted 3 March 1999
Abstract
There is growing interest in the heterogeneity of earnings among college graduates. This study examines earnings differentials across both individual and institutional characteristics. Using data from the National Longitudinal Survey
of Youth, it can be seen that graduates from highly or most selective colleges and universities earn significantly more than graduates from less selective institutions. Additionally, graduates from graduate degree granting and research
universities, and private universities earn more than their counterparts from liberal arts colleges and public institutions. There is, however, variation across racial and gender groups in the returns to individual and college characteristics.
These findings are important in an educational environment where the market value of a liberal arts education is under scrutiny, and where the higher costs of private versus public colleges and universities are being questioned.
2000 Elsevier Science Ltd. All rights reserved.
Keywords: Return to education
1. Introduction
The vast majority of the economics literature on the returns to a college degree has emphasized the level of
education in enhancing earnings ability. The first gener- ation of the literature focused on quantifying the returns
to an additional year of school or on the diploma effects of receiving one’s degree. More recently, researchers
have begun to address the full breadth of college experi- ences and to explore heterogeneity in the returns to edu-
cation. In particular, there has been a growing interest in the returns to both individual and institutional charac-
teristics.
The existing literature tends to only control for a lim- ited number of college quality or selectivity measures
Bok Bowen, 1998; Dowd, 1998; Davies Guppy, 1997; Behrman, Constantine, Kletzer, McPherson
Schapiro, 1996a; Behrman, Rosenzweig Taubman,
Corresponding author. Tel.: 1 1-617-253-5031; fax: 1 1- 617-258-8280; e-mail: jmonksmit.edu
0272-775700 - see front matter
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1996b; Brewer Ehrenberg, 1996; Brewer, Eide Ehrenberg, 1996; Daniel, Black Smith, 1995; Loury
Garman, 1995; Fox, 1993; James Alsalam, 1993; Litten Smith, 1993; Rumberger Thomas, 1993;
James, Alsalam, Conaty To, 1989. To my knowledge no study examines the earnings of liberal arts college
graduates relative to graduates from larger research-ori- ented institutions, conditional on individual and insti-
tutional quality and control. This study examines the impact of selectivity, control, and college type on earn-
ings. I limit the analysis to these institutional character- istics because these are the institutional qualities that are
most visible to prospective students and employers.
This study examines the returns to college quality con- ditional on public versus private control and on the Car-
negie classification of the institution. In addition, individ- ual ability measures and labor market experiences,
including Armed Forces Qualifications Test AFQT score as a measure of academic ability and preparation,
experience, tenure, race, gender, industry and occu- pation, are also controlled for. By using the National
Longitudinal Survey of Youth NLSY to match individ-
280 J. Monks Economics of Education Review 19 2000 279–289
uals and institutions I am able to estimate the impact of college quality on the log of hourly wages, within
institutional type and conditional upon individual charac- teristics. Conversely, I am able to estimate the returns to
other institutional characteristics conditional upon qual- ity. This is especially important in an educational
environment where the market value of a liberal arts education is under scrutiny, and where the higher costs
of private versus public colleges and universities are being questioned McPherson Schapiro, 1991.
I find strong evidence of higher earnings among the graduates of more selective institutions. There is also
evidence of a premium for attending a larger graduate degree granting university, rather than a liberal arts col-
lege, and weak evidence that graduates of private insti- tutions earn more than graduates of public institutions.
While this pattern of returns to institutional character- istics holds for most groups, there is heterogeneity in the
magnitude of the returns to institutional attributes based on race and gender. For example, it appears that males
receive a higher return to attending a graduate degree granting university and a private institution than females;
in contrast, there does not appear to be a significant dif- ference in the earnings of non-white college graduates
from public versus private institutions, while whites are penalized by the market for attending a public college
or university. Additionally, non-whites from a highly or most selective institution earn a much higher premium
than their white counterparts.
The remainder of the article is divided into four main topics. The next section outlines the sample chosen and
constructed for this study. This is followed by a descrip- tion of the underlying economic model and econometric
methodology used to estimate the earnings across college characteristics. The next section presents the results of
the regression analyses, and the final section summarizes these results.
2. Data
