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This paper investigates the wage returns to schooling and actual early work experiences, and how these returns have changed over the past twenty years. Using the [National Longitudinal Survey of Youth] NLSY surveys, we develop and estimate a dynamic model of the joint schooling and work decisions that young men make in early adulthood, and quantify how they affect wages using a generalized Mincerian specification. Our results highlight the need to account for dynamic selection and changes in composition when analyzing changes in wage returns. In particular, we find that ignoring the selectivity of accumulated work experiences results in overstatement of the returns to education.

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[The authors] show that data on subjective expectations, especially on outcomes from counterfactual choices and choice probabilities, are a powerful tool in recovering ex ante treatment effects as well as preferences for different treatments. In this paper [the authors] focus on the choice of occupation, and use elicited beliefs from a sample of male undergraduates at Duke University [in the US]. By asking individuals about potential earnings associated with counterfactual choices of college majors and occupations, [the authors] can recover the distribution of the ex ante monetary returns to particular occupations, and how these returns vary across majors. [The authors] then propose a model of occupational choice which allows [the authors] to link subjective data on earnings and choice probabilities with the non-pecuniary preferences for each occupation. [The authors] find large differences in expected earnings across occupations, and substantial heterogeneity across individuals in the corresponding ex ante returns. However, while sorting across occupations is partly driven by the ex ante monetary returns, non-monetary factors play a key role in this decision. Finally, [the] results point to the existence of sizable complementarities between college major and occupations, both in terms of earnings and non-monetary benefits.

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Proposition 209 [Prop 209] banned the use of racial preferences in admissions at public colleges in California. [The authors] analyze unique data for all applicants and enrollees within the University of California (UC) system before and after Prop 209. After Prop 209, minority graduation rates increased by 4.35 percentage points. [The authors] present evidence that certain institutions are better at graduating more-prepared students while other institutions are better at graduating less-prepared students and that these matching effects are particularly important for the bottom tail of the qualification distribution. [The authors] find that Prop 209 led to a more efficient sorting of minority students, explaining 18 per cent of the graduation rate increase in [the authors'] preferred specification. Further, there appears to have been behavioral responses to Prop 209, by universities and/or students, that explain between 23 per cent and 64 per cent of the graduation rate increase.

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This study examines the changes in the school-to-work transition of young adults in the United States over the latter part of the twentieth century. Their transition is portrayed using data from National Longitudinal Surveys of Young Women, Young Men, and Youth 1979. In general, we find that indicators of educational attainment, working while in school and non-school related work increased across cohorts for almost all racial/ethnic and gender groups. This was especially true for young women. Furthermore, various indicators of personal and family backgrounds changed in ways consistent with an improvement across cohorts in the preparation of young men and women for their attainment of schooling and work experience and their success in the labor market. The one exception to this general picture of improvement across cohorts was Hispanic men, who experienced a notable decline in educational attainment and in a variety of personal and family background characteristics. With respect to hourly wage rates, we find that wages over the ages 16 through 27 declined across cohorts. However, the rate of growth of wages with age, particularly over adult ages, increased across cohorts, except Hispanic men. Our findings highlight the need for accounting for the endogeneity and selectivity of early skill acquisition.

Published abstract reprinted from ‘Economics of education review’, copyright 2006, with permission from Elsevier. Show less

The low number of college graduates with science degrees - particularly among under-represented minorities - is of growing concern. We examine differences across universities in graduating students in different fields. Using student-level data on the University of California system during a period in which racial preferences were in place, we show significant sorting into majors based on academic preparation, with science majors at each campus having on average stronger credentials than their non-science counterparts. Students with relatively weaker academic preparation are significantly more likely to leave the sciences and take longer to graduate at each campus. We show the vast majority of minority students would be more likely to graduate with a science degree and graduate in less time had they attended a lower ranked university. Similar results do not apply for non-minority students.

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Proposition 209 banned using racial preferences in admissions at California's public colleges. We analyze unique data for all applicants and enrollees within the University of California (UC) system before and after Prop 209. After Prop 209, graduation rates of minorities increased by 4.4 per cent. We characterize conditions required for better matching of students to campuses to account for this increase. We find that Prop 209 did improve matching and this improvement was important for the graduation gains experienced by less-prepared students. At the same time, better matching only explains about 20 per cent of the overall graduation rate increase. Changes after Prop 209 in the selectivity of enrolled students explains 34-50 per cent of the increase. Finally, it appears UC campuses responded to Prop 209 by doing more to help retain and graduate its students, which explains between 30-46 per cent of the post-Prop 209 improvement in the graduation rate of minorities.

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