| By: |
Song, Moohoun;
Orazem, Peter;
Wohlgemuth, Darin |
| Abstract: |
Students in majors with higher average quantitative GRE scores are less likely
to attend graduate school while students in majors with higher average verbal
GRE scores are more likely to attend graduate school. This sorting effect
means that students whose cognitive skills are associated with lower earnings
at the bachelor’s level are the most likely to attend graduate school. As a
result, there is a substantial downward bias in estimated returns to graduate
education. Correcting for the sorting effect raises estimated annualized
returns to a Master’s or doctoral degree from about 5% to 7.3% and 12.8%
respectively. Estimated returns to professional degrees rise from 13.9% to
16.6%. These findings correspond to a large increase in relative earnings
received by postgraduate degree holders in the United States over the past 20
years. |
| Keywords: |
Postgraduate, Rate of return, Demand for schooling, Quantitative skills, Qualitative skills, Sorting |
| JEL: |
J3 |
| Date: |
2007–09–07 |
| URL: |
http://d.repec.org/n?u=RePEc:isu:genres:12843&r=sog |