Abstract
Recent research on economic returns to higher education in the United States suggests that those with the highest wage returns to a college degree are least likely to obtain one. We extend the study of heterogeneous returns to tertiary education across multiple institutional contexts, investigating how the relationship between wage returns and the propensity to complete a degree varies by the level of expansion, differentiation, and cost of higher education. Drawing on panel data and matching techniques, we compare findings from the US with selection into degree completion in Germany and the UK. Contrary to previous studies, we find little evidence for population level heterogeneity in economic returns to higher education.
Similar content being viewed by others
Change history
03 June 2017
An erratum to this article has been published.
Notes
Available from authors on request.
References
Ainsworth, J. W., & Roscigno, V. J. (2005). Stratification, school-work linkages and vocational education. Social Forces, 84(1), 257–284.
Arum, R., & Roksa, J. (2011). Academically adrift: Limited learning on college campuses. Chicago: University of Chicago Press.
Bar Haim, E., & Shavit, Y. (2013). Expansion and inequality of educational opportunity: A comparative study. Research in Social Stratification and Mobility, 31, 22–31. doi:10.1016/j.rssm.2012.10.001.
Beattie, I. R. (2002). Are all” adolescent econometricians” created equal? Racial, class, and gender differences in college enrollment. Sociology of Education, 75(1), 19–43.
Becker, G. S. (1994). Human capital: A theoretical and empirical analysis, with special reference to education. Chicago: University of Chicago Press.
Becker, R., & Hecken, A. E. (2009). Why are working-class children diverted from universities?—An empirical assessment of the diversion thesis. European Sociological Review, 25(2), 233–250. doi:10.1093/esr/jcn039.
Becker, S. O., & Ichino, A. (2002). Estimation of average treatment effects based on propensity scores. Stata Journal, 2(4), 358–377.
Blossfeld, H. -P., & Stockmann, R. (1999). The german dual system in comparative perspective. International Journal of Sociology, 28, 3–28.
Blossfeld, H. -P., & Timm, A. (2003). Who marries whom?: educational systems as marriage markets in modern societies (Vol. 12). New York: Springer Science & Business Media.
Bourdieu, P., & Passeron, J. -C. (1990). Reproduction in education, society and culture (Vol. 4). London: Sage.
Brand, J. E., & Xie, Y. (2010). Who benefits most from college? Evidence for negative selection in heterogeneous economic returns to higher education. American Sociological Review, 75(2), 273–302. doi:10.1177/0003122410363567.
Breen, R., Choi, S., & Holm, A. (2015). Heterogeneous causal effects and sample selection bias. Sociological Science, 2, 351–369. doi:10.15195/v2.a17.
Breen, R., & Goldthorpe, J. H. (1997). Explaining educational differentials towards a formal rational action theory. Rationality and society, 9(3), 275–305.
Buchmann, C., DiPrete, T. A., & McDaniel, A. (2008). Gender inequalities in education. Annual Review of Sociology, 34, 319–337.
Card, D. (1999). The causal effect of education on earnings. In O. Ashenfelter & D. Card (Eds.), Handbook of labor economics (Vol. 3, pp. 1801–1863). New york: North Holland.
Card, D., & Lemieux, T. (2001). Can falling supply explain the rising return to college for younger men? A cohort-based analysis. The Quarterly Journal of Economics, 116(2), 705–746. doi:10.1162/00335530151144140.
Carneiro, P., Heckman, J. J., & Vytlacil, E. J. (2011). Estimating marginal returns to education. American Economic Review, 101(6), 2754–2781. doi:10.1257/aer.101.6.2754.
Carnevale, A. P., Rose, S. J., & Cheah, B. (2011). The college payoff: Education, occupations, Lifetime Earnings. Washington D.C.: Georgetown University Center on Education and the Workforce.
Cheung, S. Y., & Egerton, M. (2007). Great Britain: Higher education expansion and reform—changing educational inequalities. In Y. Shavit, R. ARum, & A. Gamoran (Eds.), Stratification in higher education: A comparative study. Standford: Stanford University Press.
Dearden, L., McGranahan, L., & Sianesi, B. (2004). Returns to education for the’marginal learner’: evidence from the BCS70. London School of Economics and Political Science: Centre for the Economics of Education.
Deil-Amen, R., & Turley, R. L. (2007). A review of the transition to college literature in sociology. Teachers College Record, 109(10), 2324–2366.
Dex, S. (1995). The reliability of recall data: A literature review. Bulletin de Methodologie Sociologique, 49, 58–89.
Douglas, J. W. B. (1964). The home and the school; A study of ability and attainment in the primary school (Studies in society). London: Macgibbon & Kee.
Ganzeboom, H. B. G., & Treiman, D. J. (1996). Internationally comparable measures of occupational status for the 1988 International Standard Classification of Occupations. Social Science Research, 25(3), 201–239.
Goebel, J. (Ed.). (2015). Documentation on Biography and Life History Data for SOEP v30 (SOEP Survey Papers 266: Series D). Berlin: DIW/SOEP.
Grodsky, E., & Jones, M. T. (2007). Real and imagined barriers to college entry: Perceptions of cost. Social Science Research, 36(2), 745–766. doi:10.1016/j.ssresearch.2006.05.001.
Hanushek, E. A., & W ößmann, L. (2006). Does educational tracking affect performance and inequality? Differences- in-differences evidence across countries*. The Economic Journal, 116(510), C63–C76. doi:10.1111/j.1468-0297.2006.01076.x.
Hauser, R. M., Tsai, S. L., & Sewell, W. H. (1983). A model of stratification with response error in social and psychological variables. Sociology of Education, 56(1), 20–46.
Heckman, J. J., Urzua, S., & Vytlacil, E. (2006). Understanding instrumental variables in models with essential heterogeneity. The Review of Economics and Statistics, 88(3), 389–432.
Heller, D. E. (1997). Student price response in higher education: An update to Leslie and Brinkman. Journal of Higher Education, 68(6), 624–659.
Henderson, D. J., Polachek, S. W., & Wang, L. (2011). Heterogeneity in schooling rates of return. Economics of Education Review, 30(6), 1202–1214. doi:10.1016/j.econedurev.2011.05.002.
Hillmert, S., & Jacob, M. (2003). Social inequality in higher education. Is vocational training a pathway leading to or away from university? European Sociological Review, 19(3), 319–334. doi:10.1093/esr/19.3.319.
Hilmer, M. J., & Hilmer, C. E. (2012). On the relationship between student tastes and motivations, higher education decisions, and annual earnings. Economics of Education Review, 31(1), 66–75. doi:10.1016/j.econedurev.2011.09.004.
Hout, M. (2012). Social and economic returns to college education in the United States. Annual Review of Sociology. doi:10.1146/annurev.soc.012809.102503.
Hunter, J. E., Crosson, J. J., & Friedman, D. H. (1985). The validity of the Armed Services Vocational Aptitude Battery (ASVAB) for civilian and military job performance. Washington, DC: Department of Defense.
Kalleberg, A. L. (2000). Nonstandard employment relations: Part-time, temporary and contract work. Annual Review of Sociology, 26, 341–365.
Lau, L. K. (2003). Institutional factors affecting student retention. Education, 124(1), 126–136.
Long, M. C. (2010). Changes in the returns to education and college quality. Economics of Education Review, 29(3), 338–347.
Lucas, S. R. (2001). Effectively maintained inequality: Education transitions, track mobility, and social background effects 1. American Journal of Sociology, 106(6), 1642–1690.
Lunt, M. (2013). PBALCHK: Checking covariate balance. http://personalpages.manchester.ac.uk/staff/mark.lunt/propensity.html. Accessed 14 Mar 2017.
Malamud, O., & Pop-Eleches, C. (2011). School tracking and access to higher education among disadvantaged groups. Journal of Public Economics, 95(11–12), 1538–1549. doi:10.1016/j.jpubeco.2011.03.006.
McLanahan, S., & Sandefur, G. D. (1994). Growing up with a single parent: What hurts, what helps. Cambridge: Harvard University Press.
Meek, V. L., Goedegebuure, L., Kivinen, O., & Rinne, R. (1996). The mockers and mocked: Comparative perspectives on differentiation, convergence, and diversity in higher education. Oxford: IAU Press.
OECD (2011). Education at a glance 2011: OECD indicators. OECD Publishing. doi:10.1787/eag-2011-en
Paterson, L., & Iannelli, C. (2007). Social class and educational attainment: A comparative study of England, Wales, and Scotland. Sociology of Education, 80(4), 330–358. doi:10.1177/003804070708000403.
Perna, L. W., & Titus, M. A. (2005). The relationship between parental involvement as social capital and college enrollment: an examination of racial/ethnic group differences. The Journal of Higher Education, 76(5), 485–518.
Quinn, J. (2013). Drop-out and completion in higher education in Europe among students from under-represented groups. Network of Experts on Social aspects of Education and Training (NESET). European Union: European Commission.
Raftery, A. E., & Hout, M. (1993a). Maximally maintained inequality: Expansion, reform, and opportunity in Irish education, 1921–1975. Sociology of Education, 66, 41–62.
Raftery, A. E., & Hout, M. (1993b). Maximally maintained inequality: Expansion, reform, and opportunity in Irish education, 1921–1975. Sociology of Education, 66(1), 41–62.
Shavit, Y., Arum, R., Gamoran, A., & Menachem, G. (2007). Stratification in higher education: A comparative study. Standford: Stanford University Press.
Shavit, Y., & Müller, W. (1998). From school to work: a comparative study of educational qualifications and occupational destinations. Oxford: Clarendon Press.
Spence, M. (1973). Job market signaling. The Quarterly Journal of Economics, 87(3), 355–374.
Tam, T., & Jiang, J. (2014). The making of higher education inequality: How do mechanisms and pathways depend on competition? American Sociological Review, 79(4), 807–816. doi:10.1177/0003122414534437.
Van de Werfhorst, H. G., & Mijs, J. J. B. (2010). Achievement inequality and the institutional structure of educational systems: A comparative perspective. In K. S. Cook, & D. S. Massey (Eds.), Annual Review of Sociology, Vol 36 (Vol. 36, pp. 407–428, Annual Review of Sociology). Palo Alto: Annual Reviews.
Willis, R. J., & Rosen, S. (1978). Education and self-selection. Massachusetts: National Bureau of Economic Research Cambridge.
Xie, Y., Brand, J. E., & Jann, B. (2012). Estimating heterogeneous treatment effects with observational data. Sociological Methodology, 42(1), 314–347.
Zhou, X., & Xie, Y. (2016). Heterogeneous treatment effects in the presence of self-selection: A propensity score perspective. doi:10.2139/ssrn.2905464
Acknowledgements
This research was supported by a Grant from the John Fell Fund at the University of Oxford, by a Grant from the British Academy, and the Economic and Social Research Council [Grant No. ES/L009153/1]. Previous versions of this article were presented at the European Population Conference in 2012 and the Population Association of America meetings in 2013. We would like to thank Mike Brewer, Tom DiPrete, and Eric Grodsky for their comments and advice on previous drafts. This Project was completed with research assistance from Gwendolyn Blossfeld, Beatriz Diaz Cuervo, and Sarah Wilkins Laflamme.
Author information
Authors and Affiliations
Corresponding author
Additional information
The original version of this article was revised: The error in author group and affiliation have been corrected. Yammer Microsoft is the affiliation of the second author.
An erratum to this article is available at https://doi.org/10.1007/s11162-017-9461-3.
Rights and permissions
About this article
Cite this article
Luthra, R.R., Flashman, J. Who Benefits Most from a University Degree?: A Cross-National Comparison of Selection and Wage Returns in the US, UK, and Germany. Res High Educ 58, 843–878 (2017). https://doi.org/10.1007/s11162-017-9451-5
Received:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s11162-017-9451-5