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

Jennie E. Brand, University of California, Los Angeles
Yu Xie, University of Michigan

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. 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. 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.