The Discount Rate of Foreign Education: A Differences-in- Differences Approach

Lulu Chen, University of Michigan

Census data demonstrate that Asian Americans have the highest median income among all racial groups in the United States (US Census Bureau 2004). Because of such promising statistics, a common perception is that Asian Americans have “made it” in American society. However, the “success” of Asian Americans is not uniform within the population. Past studies of the stratification of Asian Americans have focused on immigration status, nativity, length of stay, and ethnicity to account for the differences. A recent study stresses place of education as a crucial dimension in the stratification of Asian Americans. Once place of education is included in statistical models, race and nativity are no longer consequential. This study is an extension of the earnings’ disadvantages that arise from place of education. Specifically, we seek to determine the causal effect of US education through a counterfactual framework by using the differences-in-differences strategy.