The Returns to Quality in Graduate Education

This paper estimates the monetary return to quality in U.S. graduate education, controlling for cognitive ability and self-selection across award level, program quality, and field-of-study. In most program types, I cannot reject the hypothesis of no returns to either degree completion or program quality. Important exceptions include master’s programs in health science, where completion substantially increases earnings, and in MBA and professional degree programs, where program quality has a positive influence on earnings. I explore the job characteristics that predict greater earnings among students with tertiary education, and I estimate the returns to quality in terms of non-monetary job benefits. JEL classifications: I21, I23, J24 keywords: graduate school, ability, returns to quality ∗Department of Economics, University of Michigan