In-school work experience and the returns to two-year and four-year colleges

Abstract

Building on the existing education literature, we address two interrelated questions. First, how sensitive are estimated returns to two-year and four-year colleges to the inclusion of in-school work experience? Second, do the estimated returns to in-school work experience vary by type of educational institution attended? Regarding the first question, we find that in-school work experience is an important determinant of earnings, and that if in-school work experience is not taken into account, estimated returns to schooling estimates will be upwardly biased. Returns to education categories that do not involve the awarding of a degree, such as attending a two-year college, appear to be especially sensitive to the inclusion of in-school work experience. Our evidence on the second question indicates that estimated returns to in-school work experience also vary with type of schooling. We find that work experience acquired while attending a community college has a relatively large effect, suggesting that schooling and work are more complementary for two-year than four-year colleges.