Estimating heterogeneous returns to college by cognitive and non-cognitive ability

Oliver Cassagneau-Francis ()
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Oliver Cassagneau-Francis: UCL Centre for Education Policy and Equalising Opportunities

No 25-10, CEPEO Working Paper Series from UCL Centre for Education Policy and Equalising Opportunities

Abstract: Recent work has highlighted the significant variation in returns to higher education across individuals. I 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, and show that the model is non-parametrically identified. Applying the method to data from a UK cohort study, the findings reflect recent evidence that skills and ability are multidimensional. The 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 I show is empirically important. 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)
JEL-codes: E24 I23 I26 J24 (search for similar items in EconPapers)
Pages: 60 pages
Date: 2025-09, Revised 2025-09
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https://repec-cepeo.ucl.ac.uk/cepeow/cepeowp25-10.pdf Initial version, 2025 (application/pdf)

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