Who Benefits Most from College? Evidence for Negative Selection in Heterogeneous Economic Returns to Higher Education

We consider how the economic return to a college education varies across members in the U.S. population. Based on principles of comparative advantage, positive selection is commonly presumed, i.e., that individuals who are most likely to select into college benefit most from college. Net of observed economic and non-economic factors influencing college attendance, we conjecture that individuals who are least likely to obtain a college education benefit most from college. We call this theory the negative selection hypothesis. To adjudicate between the two hypotheses, we study the effects of completing college on earnings by propensity score strata using longitudinal data from three sources representing three different cohorts: the National Longitudinal Study of Youth 1979, the National Longitudinal Study Class of 1972, and the Wisconsin Longitudinal Study, For both men and women, for every observed life course stage, and for all three data sources, we find evidence for negative selection. We discuss patterns across propensity score strata by gender, cohort, and life course. Results from auxiliary analyses demonstrate differential selection mechanisms and counterfactual expectations offering potential explanations for negative selection and suggest that empirical support in the past literature for positive selection may result from model specifications with more limited variables.