Abstract
This research is based on the uniqueness of the national tests scores in Colombia where the same students take a standardized test both at the end of high school and at the end of college. We use then the information of the labor market to identify the return to college education once the graduates find a job. The findings suggest that there is heterogeneity in the return of education than varies according to the university attended by the graduate. The wage premium for graduation from a top-ranked university is around 12%, and the penalty for graduating from a bottom-ranked university is close to 10%, and higher than the estimated wage gender gap of 8%. The research controls by innate ability using exit test scores to mitigate self-selection bias, or bias generated for specific job market skills provided in top-ranked universities. Location and major chosen are determinants of the variation in wages. The results are adjusted by these factors.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Badel, A. and Peña, X. (2010) ‘Decomposing the gender wage gap with sample selection adjustment: Evidence from Colombia’, Revista de Analisis Economico – Economic Analysis Review 25(2): 169–191. https://ideas.repec.org/a/ila/anaeco/v25y2010i2p169-191.html.
Bell, A., Fairbrother, M. and Jones, K. (2019) ‘Fixed and random effects models: Making an informed choice’, Quality and Quantity: International Journal of Methodology 53(2): 1051–1074. https://doi.org/10.1007/s11135-018-0802-x.
Card, D. (1999) ‘Chapter 30 the causal effect of education on earnings’, in Handbook of Labor Economics, vol 3, Part A, Elsevier, pp. 1801–1863.
Cepeda Emiliani, L. and Barón, J.D. (2012) ‘Educational segregation and the gender wage gap for recent college graduates in Colombia’, in IZA Discussion Papers 6361, Institute for the Study of Labor (IZA).
Cohn, E. and Addison, J.T. (1998) ‘The economic returns to lifelong learning in OECD countries’, Education Economics 6(3): 253–307.
Cooper, S.T. and Cohn, E. (1997) ‘Internal rates of return to college education in the united states by sex and race’, Journal of Education Finance 23(1): 101–133, http://www.jstor.org/stable/40704017.
Eide, E.R., Brewer, D.J. and Ehrenberg, R.G. (1998) ‘Does it pay to attend an elite private college? Evidence on the effects of undergraduate college quality on graduate school attendance’ Economics of Education Review 17(4): 371–376.
Fang, H. (2006) ‘Disentangling the college wage premium: estimating a model with endogenous education choices’, International Economic Review 47(4): 1151–1185.
García, A., Guataquí, J., Guerra, J. and Maldonado, D. (2014) ‘Beyond the mincer equation: the internal rate of return to higher education in Colombia’, Education Economics 22(3): 328–344.
Gibson, J. (2001) ‘Unobservable family effects and the apparent external benefits of education’, Economics of Education Review 20: 225–233.
Griffin, P. and Edwards, A. (1993) ‘Rates of return to education in Brazil: Do labour market conditions matter?’ Economics of Education Review 12(3): 245–256.
Griffin, P. and Ganderton, P. (1996) ‘Evidence on omitted variable bias in earnings equations’, Economics of Education Review 15(2): 139–148.
Griliches, Z. (1977) ‘Estimating the returns to schooling: some econometric problem’, Econometrica 45: 1–22.
Hausmann, R., Schwab, K., Tyson, L. and Zahidi, S. (2014) The global gender gap report 2014, World Economic Forum.
Heckman, J., Lochner, L. and Todd, P. (2003) ‘Fifty years of mincer earnings regressions’, in NBER Working Paper (9732).
Huang, J., van den Brink, H.M. and Groot, W. (2012) ‘Does education promote social capital? evidence from iv analysis and nonparametric-bound analysis’, Empirical Economics 42(3): 1011–1034, https://doi.org/10.1007/s00181-011-0450-7.
Light, A. (2001) ‘In-school work experience and the returns to schooling’, Journal of Labor Economics 19(1): 65–93.
Mincer, J.A. (1974) ‘Schooling, experience, and earnings’, in NBER books, National Bureau of Economic Research, Inc.
Molitora, C. (2005) ‘In-school work experience and the returns to two-year and four-year colleges’, Economics of Education Review 24(4): 459–468
Posso, C. (2010) ‘Desigualdad salarial en Colombia 1984–2005: cambios en la composición del mercado laboral y retornos a la educación post-secundaria’, Revista Desarrollo Y Sociedad 66: 65–113.
Psacharopoulos, G. (1985) ‘Returns to education: a further international update and implications’, Journal of Human Resources 20(4): 583–604.
Rigobon, R. and Stoker, T.M. (2009) ‘Bias from censored regressors’, Journal of Business and Economic Statistics 27(3): 340–353, http://www.jstor.org/stable/27799088.
Snijders, T.A. and Berkhof, J. (2008) ‘Diagnostic checks for multilevel models’, in Handbook of Multilevel Analysis, Springer, https://doi.org/10.1007/978-0-387-73186-5_3.
Author information
Authors and Affiliations
Corresponding author
Ethics declarations
Conflicts of interest
I declare that I do not have any conflict of interest
Additional information
Publisher's Note
Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
Rights and permissions
About this article
Cite this article
Gomez, N. Returns to College Education in Colombia. High Educ Policy 35, 692–708 (2022). https://doi.org/10.1057/s41307-021-00224-2
Published:
Issue Date:
DOI: https://doi.org/10.1057/s41307-021-00224-2