When everyone goes to college: The causal effect of college expansion on earnings

Publication Date: 
March 2015
Volume 50, March 2015, Pages 229–245

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In this study, we estimate the causal effect of college expansion on earnings using the example of South Korea in the 1990s where the college enrollment rate increased from just over thirty percent to over eighty percent over a fifteen years period. We compare the pre-expansion cohort and the post-expansion cohort in order to identify those who would attend college because of the expansion but would not attend otherwise (compliers). We, then, estimate compliers’ earnings gain from the college expansion relative to the earnings changes of two control groups: those who either would or would not go to college regardless of college expansion (always-takers and never-takers). We find a striking gendered pattern; for men, the earnings return to college expansion is moderate and mostly driven by the increasing skill price, whereas, for women, the return is significantly large even net of the skill price change.