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The Return to College: Selection and Dropout Risk

Lutz Hendricks () and Oksana Leukhina ()
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Lutz Hendricks: University of North Carolina, Chapel Hill

No 2015-013, Working Papers from Human Capital and Economic Opportunity Working Group

Abstract: This paper studies the effect of graduating from college on lifetime earnings. We develop a quantitative model of college choice with uncertain graduation. Departing from much of the literature, we model in detail how students progress through college. This allows us to parameterize the model using transcript data. College transcripts reveal substantial and persistent heterogeneity in students’ credit accumulation rates that are strongly related to graduation outcomes. From this data, the model infers a large ability gap between college graduates and high school graduates that accounts for 54% of the college lifetime earnings premium.

Keywords: education; college premium; college dropout risk (search for similar items in EconPapers)
JEL-codes: E24 J24 I21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge, nep-edu, nep-hrm and nep-mac
Date: 2015-11
Note: M
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Downloads: (external link) ... _returns-college.pdf First version, November 2015 (application/pdf)

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Working Paper: The return to college: Selection and dropout risk (2014) Downloads
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