Recent studies have found a large earnings premium to attending a more selective college, but the mechanisms underlying this premium have received little attention and remain unclear. In order to shed light on this question, I develop a multi-dimensional signaling model relying on college grades and selectivity that rationalizes students' choices of effort and firms' wage-setting behavior. The model is then used to produce predictions of how the interaction of the signals should be related to wages. Using five data sets that span the early 1960s through the late 2000s, I show that the data support the predictions of the signaling model, with support growing stronger over time. I also discuss alternative explanations, including different types of human capital models; provide robustness checks; and relate the findings to both the returns- to-college-quality and employer learning literatures.
This paper explores how high school graduate men and women vary in their behavioral responses to beginning labor market entry during a recession. In contrast with previous related literature that found a substantial negative wage impact but minimal employment impact in samples of highly educated men, the empirical evidence presented here suggests a different outcome for the less well educated, and between the sexes. Women, but not men, who graduate high school in an adverse labor market are less likely to be in the workforce for the next four years, but longer-term effects are minimal. Further, while men increase their enrollment as a short-run response to weak labor demand, women do not; instead, they appear temporarily to substitute into home production. Women's wages are less affected than men's, and both groups' wages are less affected than the college graduates previously studied.
Decades of research on the U.S. gender gap in wages describe its correlates, but little is known about why women changed their career investments in the 1960s and 1970s. This paper explores the role of "the Pill" in altering women's human capital investments, selection, and marital outcomes and its ultimate implications for their wages. Using state-by-birth cohort variation in laws granting access to the Pill by age 21, we show that early access to the Pill conferred an 8-percent hourly wage premium by age fifty. Roughly two thirds of this premium is explained by the Pill's effect on accumulated labor-force experience and a remaining third by changes in women's education and occupations. Stratifying women on IQ measured in high school shows that the Pill's effect on wages is driven by the interaction of selection and skill investments. Assuming the Pill had never been available to younger, unmarried women, our estimates imply that the convergence in the gender gap among 25 to 49 year olds would have been 10 percent smaller in the 1980s and 30 percent smaller in the 1990s.
This paper uses a unique natural experiment to investigate the sensitivity of American college women's contraceptive choice to the price of oral birth control and the importance of its use on educational and health outcomes. With the passage of the Deficit Reduction Act of 2005, Congress inadvertently and unexpectedly increased the effective price of birth control pills ("the Pill") at college health centers more than three-fold, from $5 to $10 a month to between $30 to $50 a month. Using quasi-difference-in-difference and fixed effects methodologies and an intention-to-treat (ITT) design with two different data sets, we find that this policy change reduced use of the Pill by at least 1 to 1.8 percentage points, or 2 to 4 percent, among college women, on average. For college women who lacked health insurance or carried large credit card balances, the decline was two to three times as large. Women who lack insurance and have sex infrequently appear to substitute toward emergency contraception; uninsured women who are frequent sex participants appear to substitute toward non-prescription forms of birth control. Additionally, we find small but significant decreases in frequency of intercourse and the number of sex partners, suggesting that some women may be substituting away from sexual behavior in general.
Gaining entrance to a four-year college or university, particularly a selective institution, has become increasingly competitive over the last several decades. We document this phenomenon and show how it has varied across different parts of the student ability distribution and across regions, with the most pronounced increases in competition being found among higher-ability students and in the Northeast. Additionally, we explore how the college preparatory behavior of high school seniors has changed in response to the growth in competition. We also discuss the theoretical implications of increased competition on longer-term measures of learning and achievement and attempt to test them empirically; the evidence and related literature, while limited, suggests little long-term benefit.