Labor force earnings and college choice of young women: An examination of selectivity bias and comparative advantage

Abstract

A generalized approach to selectivity bias is derived and applied to the joint decision of college attendance and labor force participation for young women. The results here indicate that these decisions are strongly correlated. Moreover, the estimated rate of return to college education is found to be very sensitive to this correlation. This fact suggests that ignoring the relationship between these two decisions leads to rate of return estimates that are biased downward for those who attend college and biased upward for those who do not attend college.