Returns to Education through Access to Higher-Paying Firms: Evidence from US Matched Employer-Employee Data
- (pp. 374-78)
Abstract
We use administrative US matched employer-employee data merged with detailed information on individuals' academic records to assess the extent to which returns to education are mediated by the sorting of workers across firms. We present three results. First, we confirm findings in the earlier literature of large pay differences across higher education degrees. Second, we show that up to one quarter of pay premiums for higher degrees are explained by between-firm pay differences. Third, higher degrees are associated with greater representation at the best-paying firms. We conclude that employer heterogeneity is an important factor in mediating the returns to education.Citation
Engbom, Niklas, and Christian Moser. 2017. "Returns to Education through Access to Higher-Paying Firms: Evidence from US Matched Employer-Employee Data." American Economic Review, 107 (5): 374-78. DOI: 10.1257/aer.p20171013Additional Materials
JEL Classification
- I26 Returns to Education
- J24 Human Capital; Skills; Occupational Choice; Labor Productivity
- J31 Wage Level and Structure; Wage Differentials