What are the economic returns of attending a high quality college?

Massimo Anelli uses a newly constructed dataset which links academic performance to college admission and labour market data for individuals.

Massimo Anelli is PhD candidate and currently Job Market Candidate of the Department of Economics at the University of California (UC Davis).

Prior to starting his PhD, he worked at Fondazione Rodolfo DeBenedetti (fRDB), where he is currently Research Fellow. He obtained a Master of Science in Economics from Bocconi University. He joined  the Institute for the Study of Labor (IZA) as a Research Affiliate in January 2015.

His research interests are in Labour Economics, the Economics of Education, the Economics of Gender and Migration. In particular, his work focuses on the returns to quality of higher education, the determinants of the gender wage gap, the effects of classroom gender interaction, gender of siblings and foreign peers on academic outcomes in higher education.

Massimo Anelli made a presentation to our researchers on a paper he wrote, titled “Returns to elite college education: a quasi-experimental analysis ».

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 cut-off to estimate causal returns to college education quality. He uses a newly constructed dataset which links academic performance to college admission and labour market data for individuals that applied to college between 1985 and 2005. He estimates that attending an elite university yields a 52% premium in yearly earnings.

These returns are heterogeneous 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. He explores the potential mechanisms and finds that students with a score right below the admission cut-off are less likely to graduate from college and choose different majors. Cumulated over 15 years, the span of earnings data for his sample, the net premium of attending the elite university amounts to EUR 74,570.