Quantile Treatment Effects of College Quality on Earnings: Evidence from Administrative Data in Texas
This paper uses administrative data on schooling and earnings from Texas to estimate the effect of college quality on the distribution of earnings. We proxy college quality using the college sector from which students graduate and focus on identifying how graduating from UT-Austin, Texas A\&M or a community college affects the distribution of earnings relative to graduating from a non-flagship university in Texas. Our methodological approach uses the rich set of observable student academic ability and background characteristics in the data to adjust the earnings distributions across college sectors for the fact that college sector quality is correlated with factors that also affect earnings. Although our mean earnings estimates are similar to previous work in this area, we find evidence of substantial heterogeneity in the returns to college quality. At UT-Austin, the returns increase across the earnings distribution, while at Texas A\&M they tend to decline with one's place in the distribution. For community college graduates, the returns relative to non-flagship four-year graduates are negative across most of the distribution of earnings, but they approach zero and become positive for higher earners. Our data also allow us to estimate effects separately by race and ethnicity, and we find that historically under-represented minorities experience the highest returns in the upper tails of the earnings distribution, particularly among UT-Austin and community college graduates. While we focus on graduates, we also show our estimates are robust to examining college attendees as well as to many other changes in the sample and to the estimation strategy. Overall, these estimates provide the first direct evidence of the extent of heterogeneity in the effect of college quality on subsequent earnings, and our estimates point to the need to consider such heterogeneity in human capital models that incorporate college quality.
We would like to thank John DiNardo, Nicole Fortin, Doug Almond, Mark Hoekstra, Jeff Smith, Trevon Logan, and Lock Reynolds as well as seminar participants at the Institute for Research on Poverty Summer Workshop, the NBER Summer Institute Education Workshop, the University of Rochester, the IFS-STICERD Public Economics Seminar, the University of British Columbia, Ohio State University, Emory University and the University of Texas at Arlington, the University of Texas at Dallas for helpful comments and suggestions. We thank Priyanka Singh for excellent research assistance. Rodney Andrews gratefully acknowledges the support of grants from both the Bill and Melinda Gates Foundation and the Smith Richardson Foundation. This research was made possible through data provided by the University of Texas at Dallas Education Research Center. The conclusions of this research do not necessarily reflect the opinions or official position of the Texas Education Agency, the Texas Higher Education Coordinating Board, or the State of Texas. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
R. J. Andrews & J. Li & M. F. Lovenheim, 2016. "Quantile Treatment Effects of College Quality on Earnings," Journal of Human Resources, vol 51(1), pages 200-238.