Search Results
Working Paper
Explaining Cross-Cohort Differences in Life Cycle Earnings
College-educated workers entering the labor market in 1940 experienced a 4-fold increase in their labor earnings between the ages of 25 and 55; in contrast, the increase was 2.6-fold for those entering the market in 1980. For workers without a college education these figures are 3.6-fold and 1.5-fold, respectively. Why are earnings profiles flatter for recent cohorts? We build a parsimonious model of schooling and human capital accumulation on the job and calibrate it to earnings statistics of workers from the 1940 cohort. The model accounts for 99 percent of the flattening of earnings ...
Report
Educational Attainment and Wage Growth in New England: Evidence from Four Decades of Administrative Wage Records
Per capita personal income in New England grew from $10,731 to $87,655 during the 1980–2024 period. This increase, the largest among all US census divisions, coincided with significant growth in educational attainment in the region. As of 2024, 53 percent of New England workers aged 25 to 64 held at least a bachelor’s degree, and 23 percent possessed advanced degrees, compared with national averages of 44 percent and 17 percent, respectively. This study provides new insights into the relationship between educational attainment and income growth in New England, examining both individual ...
Working Paper
Decomposing Outcome Differences between HBCU and Non-HBCU Institutions
This paper investigates differences in outcomes between historically black colleges and universities (HBCU) and traditional college and universities (non-HBCUs) using a standard Oaxaca/Blinder decomposition. This method decomposes differences in observed educational and labor market outcomes between HBCU and non-HBCU students into differences in characteristics (both student and institutional) and differences in how those characteristics translate into differential outcomes. Efforts to control for differences in unobservables between the two types of students are undertaken through ...
Working Paper
Educational Attainment and the Evolution of Cumulative Earnings across 45 US Birth Cohorts
Educational attainment profoundly shapes cumulative earnings trends across US birth cohorts. Between the 1933 and 1977 cohorts, men with an advanced degree experienced rising earnings in both the early-career (ages 25 to 44) and late-career (ages 45 to 64) stages, while those with a sub-baccalaureate education―and college graduates outside the 1951–1965 cohorts―saw minimal earnings growth. Women experienced broad-based gains, with larger increases among those with a bachelor’s or advanced degree. For less educated men, extended work life represented the primary growth margin in the ...
Discussion Paper
Modern Income-Share Agreements in Postsecondary Education: Features, Theory, Applications
An income-share agreement (ISA) in postsecondary education is a contract in which students pledge to pay a certain percentage of their future incomes over a set period of time in exchange for funding educational program expenses in the present. Typically, participants begin to make payments once their incomes rise above a minimum threshold set by the terms of the ISA and will never pay more than a set cap (usually, a multiple of the original amount). Funding for ISAs can range from university sources to philanthropic funding and private investor capital. In this study, we describe the many ...
Working Paper
Causes and Consequences of Student-College Mismatch
What are the tradeoffs of meritocratic college admissions? On one hand, stronger sorting between students and colleges may produce more human capital on aggregate if higher ability students benefit more from attending higher quality colleges. On the other hand, stronger sorting generates a higher degree of earnings inequality and reduces upward mobility. In this paper, we examine student-college sorting and study aggregate implications of redistributive college admissions policies such as affirmative action. To this end, we develop a model with heterogeneous students and college types that ...
Discussion Paper
The Cost of College Continues to Climb
College is much more expensive than it used to be. Tuition for a bachelor’s degree has more than tripled from an (inflation-adjusted) average of about $5,000 per year in the 1970s to around $18,000 today. For many parents and prospective students, this high and rising tuition has raised concerns about whether getting a college degree is still worth it—a question we addressed in a 2014 study. In this post, we update that study, estimating the cost of college in terms of both out-of-pocket expenses, like tuition, and opportunity costs, the wages one gives up to attend school. We find that ...
Working Paper
ivcrc: An Instrumental Variables Estimator for the Correlated Random Coefficients Model
We discuss the ivcrc module, which implements an instrumental variables (IV) estimator for the linear correlated random coefficients (CRC) model. The CRC model is a natural generalization of the standard linear IV model that allows for endogenous, multivalued treatments and unobserved heterogeneity in treatment effects. The estimator implemented by ivcrc uses recent semiparametric identification results that allow for flexible functional forms and permit instruments that may be binary, discrete, or continuous. The ivcrc module also allows for the estimation of varying coefficients ...
Journal Article
Is College Still Worth It? The New Calculus of Falling Returns
The college income premium is the extra income earned by a family whose head has a college degree over the income earned by an otherwise similar family whose head does not have a college degree. This premium remains positive but has declined for recent graduates. The college wealth premium (extra net worth) has declined more noticeably among all cohorts born after 1940. Among families whose head is White and born in the 1980s, the college wealth premium of a terminal four-year bachelor?s degree is at a historic low; among families whose head is any other race and ethnicity born in that ...