Is There a Devaluation of Degrees? Unobserved Heterogeneity in Returns to Education and Early Experience

Damiano Argan, Robert J. Gary-Bobo () and Marion Goussé
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Damiano Argan: LUISS Guido Carli University
Robert J. Gary-Bobo: University of Paris 1 Panthéon-Sorbonne

No 18053, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We study how the returns to higher education evolved in France during a period of educational expansion. We study possible changes in the mix of unobservable characteristics of the graduate population. Using a finite mixture model with latent types, we estimate type-specific log-wage, experience accumulation, and education-choice equations. We find that expected real wages declined for higher-education degrees, and that this result is not driven by adverse selection. Returns to education and experience decreased for certain unobserved types but increased for others. The composition of types among Master’s graduates suggests improved student selection over time, despite rising graduate numbers.

Keywords: unobserved heterogeneity; selection; human capital; returns to experience; returns to education; wages; finite-mixture models; latent types (search for similar items in EconPapers)
JEL-codes: C33 I21 I24 I26 J22 J24 J31 (search for similar items in EconPapers)
Date: 2025-07
New Economics Papers: this item is included in nep-edu, nep-eur and nep-lma
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Working Paper: Is there a devaluation of degrees ? Unobserved heterogeneity in returns to education and early experience (2023)
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