This paper estimates the financial returns to higher education quality in the UK. To account for the selectivity of students to institution, we rely on a selection on observable assumption. We use several estimates including the Generalised Propensity Score (GPS) of Hirano and Imbens, which relies on a continuous measure of institutional quality. This highlights that the returns to quality are heterogeneous and mostly driven by high-quality institutions. Moving from an institution in the third quality quartile to a top quality institution is associated with a 7% increase in earnings.
This paper was drafted during a placement at the Department for Innovation, Universities and Skills. The views represented in this manuscripts are the author’s and do not represent the view of the DIUS. Financial support from the ESRC for their placement scheme is also gratefully acknowledged (RES-173-27-0040). I thank Stijn Broecke, Victor Lavy, Tarja Viitanen and participants at seminars at DIUS and Oxford University for comments on earlier drafts, as well as three anonymous referees and Kostas Tatsiramos for detailed comments that have substantially improved the manuscript.
Chevalier, A. (2014), "Does Higher Education Quality Matter in the UK?", Factors Affecting Worker Well-being: The Impact of Change in the Labor Market (Research in Labor Economics, Vol. 40), Emerald Group Publishing Limited, Bingley, pp. 257-292. https://doi.org/10.1108/S0147-912120140000040010
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