Changes in the Economic Returns to Attending Prestigious Institutions in Norway

Abstract

ABSTRACTThe purpose of this paper is to explore whether the returns to attending a prestigious higher education institution have increased in Norway for students who graduated in 1975 to students who graduated in 1999. A handful of published studies find that the returns to attending prestigious institutions have increased in the last decades. However, they all study the USA, which has a decentralized wage bargaining system. The results in this paper shed light on whether a centralized wage bargaining system, typical for many west-European countries, prevents the returns to attending prestigious institutions from increasing. I find that attending prestigious institutions pays off economically in Norway and that the returns have increased throughout the investigated period. Another aim of this paper is to investigate whether the returns have increased more at the top of the earnings distribution than at the bottom. I find that the returns are highest at the top of the earnings distribution and have increased the most at the top. At the 90th quantile, for instance, students who attended a prestigious business school between 1975 and 1979 obtained 80% higher earnings than students attending nonprestigious institutions in the same period. Among students who graduate 20 years later, this difference is 139%.