Revisiting the Returns to Higher Education: Heterogeneity by Cognitive and Non-Cognitive Abilities

Oliver Cassagneau-Francis

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Abstract: Recent work has highlighted the significant variation in returns to higher education across individuals. We develop a novel methodology-exploiting recent advances in the identification of mixture models-which groups individuals according to their prior ability and estimates the wage returns to a university degree by group. We prove the non-parametric identification of our model. Applying our method to data from a UK cohort study, our findings reflect recent evidence that skills and ability are multidimensional. Our flexible model allows the returns to university to vary across the (multi-dimensional) ability distribution, a flexibility missing from commonly used additive models, but which we show is empirically important. The returns to higher education are 3-4 times larger than the returns to prior cognitive and non-cognitive abilities. Returns are generally increasing in ability for both men and women, but vary non-monotonically across the ability distribution.

Keywords: Mixture models; Distributions; Treatment effects; Higher education; Wages; Human capital; Cognitive and non-cognitive abilities (search for similar items in EconPapers)
Date: 2022-05-19
New Economics Papers: this item is included in nep-edu, nep-inv and nep-neu
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Working Paper: Revisiting the Returns to Higher Education: Heterogeneity by Cognitive and Non-Cognitive Abilities (2022)
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