The Returns to Elite College Education: A Quasi-Experimental Analysis

Abstract

What are the economic returns of attending a high quality college? This work takes advantage of a sharp discontinuity in the probability of admission to an elite Italian university at the admission score cutoff to estimate causal returns to college education quality. I use a newly constructed dataset which links academic performance to college admission and labor market data for individuals that applied to college between 1985 and 2005. I estimate that attending an elite university yields a 52% premium in yearly earnings. These returns are heterogenous over the earnings distribution. Students scoring right above the admission threshold are more likely to have earnings above the median, but are equally likely to be top earners. I explore the potential mechanisms and find that students with a score right below the admission cutoff are less likely to graduate from college and choose different majors. Cumulated over 15 years, the span of earnings data for my sample, the net premium of attending the elite university