The Role of Mathematical and Verbal Skills on the Returns to Graduate and Professional Education

Moohoun Song, Peter Orazem and Darin Wohlgemuth

Staff General Research Papers Archive from Iowa State University, Department of Economics

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 bachelorï¾’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 Masterï¾’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: sorting; Postgraduate; Rate of return; Demand for schooling; Quantitative skills; Qualitative skills (search for similar items in EconPapers)
JEL-codes: J30 (search for similar items in EconPapers)
Date: 2007-09-07
New Economics Papers: this item is included in nep-edu and nep-sog
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Citations: View citations in EconPapers (1)

Published in Economics of Education Review, December 2008, vol. 27 no. 6, pp. 664-675

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Related works:
Journal Article: The role of mathematical and verbal skills on the returns to graduate and professional education (2008)
Working Paper: The role of mathematical and verbal skills on the returns to graduate and professional education (2008)
Working Paper: The Role of Mathematical and Verbal Skills on the Returns to Graduate and Professional Education (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:isu:genres:12843

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