The returns to higher education selectivity: evidence from students admitted to University of São Paulo

Author(s)

Gabriel Guimarães Leite

• Document type: Master's Dissertation
• Press: São Paulo.
• Institution: Universidade de São Paulo (USP). Faculdade de Economia, Administração e Contabilidade (FEA/SBD)
• Defense date: 2018-08-09

Examining board members

Fernanda Gonçalves de La Fuente Estevan; Bruno Ferman; Ricardo de Abreu Madeira; Vladimir Pinheiro Ponczek

• Advisor: Fernanda Gonçalves de La Fuente Estevan

Abstract

The return to higher education has been studied in the literature for decades, but there is little evidence regarding the wage premium of attending the most selective universities in the labor market. Especially in Brazil, where higher education is a crucial element to upward mobility, a broader comprehension about the role of the elite degree in future earnings becomes even more relevant. Hence, I estimate the wage premium of attending the University of São Paulo (USP), one of the largest and most selective universities in the country, by taking advantage of two groups around the admission grade cutoff - those admitted and those not admitted at the university. This study utilizes the Regression Discontinuity Design (fuzzy RD) to solve possible selection problems frequently discussed by the literature. In the sample of those employed in formal sector, there is no significant wage return to attending USP with respect to the counterfactual. However, the counterfactual is broad and possibly includes qualified majors, such as those offered by other public universities. This fact, combined with local estimates, can underestimate the aggregate effect. When investigating the returns in the major careers of the college entrance exam, few of them exhibit returns different from zero in the wage measures (average annual income and the average salary in December). Yet, it is not possible to exclude that wage differences might exist in more flexible work relationships, as in the liberal professions, or that the formal labor market does not distinguish higher education institutions, since we only have earnings data from formal employment. When taking socioeconomic groups into account, only candidates who studied exclusively in public schools present positive returns to attending USP. There were no differences in the wage returns neither between men and women nor between non-white and white candidates. Finally, there are no effects on formal employment tenure and number of employment relationships. The results documented in this paper trigger a series of debates regarding educational policies, especially those related to the expansion of higher education. (AU)

• FAPESP's process: 17/10942-4 - The returns to higher education selectivity: how much is it worth and who earns more? Evidence from University of São Paulo undergraduates
• Grantee: Gabriel Guimarães Leite
• Support Opportunities: Scholarships in Brazil - Master