Educational Returns, Ability Composition and Cohort Effects: Theory and Evidence for Cohorts of Early-Career UK Graduates

Norman Ireland, Robin A. Naylor, Jeremy Smith and Shqiponja Telhaj

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: An increase over time in the proportion of young people obtaining a degree is likely to impacton the relative ability compositions (i) of graduates and non-graduates and (ii) acrossgraduates with different classes of degree award. In a signalling framework, we examine theimplications of this on biases across cohorts in estimates of educational returns. In anempirical analysis, we exploit administrative data on whole populations of UK universitystudents for ten graduate cohorts to investigate the extent to which early labour marketoutcomes vary with class of degree awarded. Consistent with our theoretical model, we findthat returns by degree class increased across cohorts during a period of substantial graduateexpansion. We also corroborate the empirical findings with evidence from complementarydata on graduate sample surveys.

Keywords: Educational Returns; College Wage Premium; Degree Class; Ability Bias; Statistical Discrimination (search for similar items in EconPapers)
JEL-codes: J31 J24 I21 D82 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-edu and nep-lab
Date: 2009-07
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Working Paper: Educational Returns, ability composition and cohort effects: theory and evidence for cohorts of early-career UK graduates (2009)
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Persistent link: http://EconPapers.repec.org/RePEc:cep:cepdps:dp0939

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