Eric R. Eide

Changes in College Skills and the Rise in the College Wage Premium

The college wage premium for new labor market entrants rose sharply during the 1980s. We ask how much of this change arose from changes in the skill level of the typical college graduate. We find that skills attained prior to college, as measured by standardized test scores and high school grades, had no effect on the change in the college wage premium for men. In contrast, the returns to math ability rose considerably for women; failing to account for math skills thus substantially overstates the growth in the female college wage premium. Skills acquired in college, as reflected in the distribution of students across majors, had important effects on the relative wages of men. The trend away from low-skill subjects such as education and toward high-skill subjects such as engineering accounts for one-fourth of the rise in the male college wage premium.

Does it pay to attend an elite private college? Evidence on the effects of undergraduate college quality on graduate school attendance

Much attention has recently focused on the rapidly rising costs of a college education, and whether the benefits of attending an elite private college have kept pace with the increasing costs. In this paper we analyze whether undergraduate college quality affects the likelihood that an individual attends graduate school. Using data on three cohorts of students from the National Longitudinal Study of the High School Class of 1972and High School and Beyond , we find that on balance attendance at an elite private college significantly increases the probability of attending graduate school, and more specifically, graduate school at a major research institution. ( JEL I21, J24)

Factors Affecting the Transmission of Earnings across Generations: A Quantile Regression Approach

In this paper we estimate intergenerational earnings mobility models using quantile regressions. Quantile regression is a less restrictive estimation approach than more commonly used methods such as ordinary least squares and instrumental variables, which only estimate the mean effects of intergenerational earnings correlation. Further, we investigate the role of education as an intergenerational transmission mechanism for earnings. We find that the intergenerational earnings correlation is greater at the bottom of the sons conditional earnings distribution than at the top, and that controlling for sons education reduces the intergenerational earnings correlation. We also find that education is relatively more valuable at the bottom of the conditional earnings distribution and thus tends to compress the distribution.

Is participation in high school athletics an investment or a consumption good?: Evidence from high school and beyond

Abstract Most high school students participate in at least one school-sponsored extracurricular activity, with varsity sports being the most popular. Conventional wisdom suggests that varsity sports participation provides participants with valuable skills. We use an instrumental variable approach to estimate whether the conventional wisdom is accurate. Using height as an instrument for participation, we find evidence that sports participation has a negative effect on the educational attainment of white male student athletes, a positive effect on the educational attainment and earnings of black male student athletes, and a positive effect on the educational attainment of white female student athletes. We find no effect of participation on the educational attainment or earnings of Hispanic males or black and Hispanic females.

The effect of grade retention on educational and labor market outcomes

Abstract Grade retention is a major issue in the ongoing debate over how to improve primary and secondary education in the United States. This paper examines the retention decision and its empirical effects using an economic framework. Within our model, the retention decision is endogenous with respect to such observables as dropping out of school and labor market earnings and this endogeneity needs to be accounted for in empirical work. In the empirical section of the paper we use the High School and Beyond (HSB) data set to examine the effects of retention on the probability of dropping out of high school and on labor market earnings several years after the student has entered the workforce. We account for the endogeneity of grade retention by using instrumental variables (IV) estimation where the key instrument is based on exogenous variation across states in kindergarten entry dates.

The Role of the Option Value of College Attendance in College Major Choice

Abstract In this paper, the analysis of college major choice is extended to include the option value of college attendance represented by the probability of and rewards from graduate school attendance. The results for men indicate that the option value is a significant, positive factor in the choice of liberal arts and science majors and is larger in all majors except computer science/engineering, for those with lower earnings at the undergraduate level. In contrast, while women may receive more after a graduate degree in any major, the option value is only significant in their choice of liberal arts and science majors. [ JEL I21, J24]

Testing for sample selection in the Milwaukee school choice experiment

We examine data collected from the Milwaukee Parental Choice Program to determine whether students with unobserved characteristics correlated with achievement are more likely to apply to the voucher program. We first estimate probit models for application to the choice program, and then math and reading achievement models. By comparing students randomly rejected from the program with students who did not apply, we can test whether applicants and nonapplicants have unobservable characteristics that are correlated both with the choice of school sector and with the included explanatory variables. We do not find strong evidence that students who apply to participate in the Milwaukee choice program have unmeasured characteristics, such as motivation, which systematically differ from non-applicants [JEL C12, I21].

Theoretical Concepts in the Economics of Education

This article reviews several of the most important theoretical concepts in the economics of education. Three of the most commonly used ideas – human capital, markets, and education production – are outlined in a nontechnical manner for a general reader. These concepts are useful in understanding why individuals choose to acquire schooling, how societies organize educational systems, and how schools use resources. Empirical studies dealing with each of these issues are reviewed elsewhere in the encyclopedia.

Accounting for Race and Gender Differences in College Wage Premium Changes

Much recent research has been devoted to the rapid rise in the college wage premium during the 1980s [3; 5; 10; 13; 14]. Murphy and Welch [13] estimated that between 1979 and 1986, the college wage premium for all age groups increased almost 20 percentage points, while the college wage premium for workers with one to five years of experience grew by 38 percentage points. While the size of the college wage premium increase is impressive, especially among recent graduates, there is substantial disparity in this change among individual race/gender groups [2; 4]. Coleman [4] found that the wage premium increase for graduates with one to five years of experience was 45 percentage points for white men, 30 percentage points for white women, and 27 percentage points for black men, while the wage premium decreased by 3 percentage points for black women.

Countywide Evaluation of the Long-Term Family Self-Sufficiency Plan: Countywide Evaluation Report

Abstract : The California Work Opportunity and Responsibility to Kids Act of 1997 (CalWORKs) provided Los Angeles County (hereafter, the County) with a large stream of funds. The County Board of Supervisors (hereafter, the Board) instructed the Countys New Directions Task Force (NDTF) to develop a Long-Term Family Self-Sufficiency (LTFSS) Plan for CalWORKs recipients and the broader low-income population, with the purpose of selecting projects that would improve the capacity of families to become self-sufficient. Each of the projects was to: (1) have an adequate evaluation design to track achievement of measurable outcomes; (2) not duplicate existing services; (3) be culturally and linguistically sensitive; (4) not supplant existing funding; and (5) address a clearly documented need. To identify those projects and more broadly to guide the LTFSS effort, the NDTF adopted Mark Friedmans Results-Based Decision Making (RBDM) Framework (hereafter, the RBDM Framework). The NDTF effort resulted in the 46 projects known collectively as the LTFSS Plan that was approved by the Board on November 16,1999. The Chief Administrative Office (CAO) is the lead agency responsible for implementing the evaluation of the LTFSS Plan. The evaluation is taking place on two levels: the Countywide level and the individual projects level. The contract to evaluate outcomes at the county level was awarded to RAND by the Board after an open and competitive bidding process. In brief, this evaluation is not on the individual progress of 46 projects, but on the progress the County has made in achieving its goal of long-term family self-sufficiency. The contract stipulated that one deliverable would be an annual Countywide Evaluation Report. This document, which is the first of three such reports draws from three previous RAND reports produced under the contract.