Educational Returns, Ability Composition And Cohort Effects: Theory And Evidence For Cohorts Of Early-Career UK Graduates

Date Added: Jun 2009
Format: PDF

An increase over time in the proportion of young people obtaining a degree is likely to impact on the relative ability compositions of graduates and non-graduates and across graduates with different classes of degree award. In a signaling framework, the authors examine the implications of this on biases across cohorts in estimates of educational returns. In an empirical analysis, they exploit administrative data on whole populations of UK university students for ten graduate cohorts to investigate the extent to which early labour market outcomes vary with class of degree awarded. Consistent with this theoretical model, they find that returns by degree class increased across cohorts during a period of substantial graduate expansion.