Working Paper Series, Department of Economics, Uppsala University
No 2010:1:
College Achievement and Earnings
Jonathan Gemus ()
Abstract: I study the size and sources of the monetary return to
college achievement as measured by cumulative Grade Point Average (GPA). I
first present evidence that the return to achievement is large and
statistically significant. I find, however, that this masks variation in
the return across different groups of people. In particular, there is no
relationship between GPA and earnings for graduate degree holders but a
large and positive relationship for people without a graduate degree. To
reconcile these results, I develop a model where students of differing and
initially uncertain ability levels choose effort level in college and
whether to earn a graduate degree. College achievement and graduate
attainment are allowed to increase human capital and be used by employers
to screen workers. In the separating equilibrium studied, workers who earn
a graduate degree can effectively signal high productivity to employers. As
a result, employers use undergraduate GPA-a noisy signal of productivity-to
screen only the workers who do not hold a graduate degree. Viewing the
empirical results through the lens of this equilibrium, the zero
GPA-earnings relationship for graduate degree holders and the positive and
large relationship for people without a graduate degree suggests that most
of the reutrn to achievement net of graduate educational attainment is
driven by sorting.
Keywords: Returns to Education; Academic Achievement; Signaling; Human Capital; (follow links to similar papers)
JEL-Codes: D82; I20; I21; J24; (follow links to similar papers)
43 pages, January 27, 2010
Before downloading any of the electronic versions below
you should read our statement on
copyright.
Download GhostScript
for viewing Postscript files and the
Acrobat Reader for viewing and printing pdf files.
Full text versions of the paper:
WP20101.pdf 
Download Statistics
Questions (including download problems) about the papers in this series should be directed to Katarina Grönvall ()
Report other problems with accessing this service to Sune Karlsson ()
or Björn Thodenius ().
Programing by
Design by Joachim Ekebom
