The Canadian University Selectivity Premium
AbstractThis paper surveys the recent empirical literature on wage premium to university selectivity, and provides new evidence to this literature on a country such as Canada that has a distinct higher education system from those already analyzed. I estimate the wage premium to university selectivity using Canadian data and two popular methods to correct for non-random selection in universities of different quality: matching methods and instrumental variables (IV). I estimate a wage premium of 7% using the matching estimator, and a premium of 14.8% using the IV estimator for alumni of selective Canadian universities 4--6 years after graduation. My findings are in line with the literature on countries with a moderately differentiated higher education system that has low variation in tuition fees and is well supported by public funds.
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