Returns to College Education in Colombia

This research is based on the uniqueness of the national tests scores in Colombia where the same students take a standardized test both at the end of high school and at the end of college. We use then the information of the labor market to identify the return to college education once the graduates find a job. The findings suggest that there is heterogeneity in the return of education than varies according to the university attended by the graduate. The wage premium for graduation from a top-ranked university is around 12%, and the penalty for graduating from a bottom-ranked university is close to 10%, and higher than the estimated wage gender gap of 8%. The research controls by innate ability using exit test scores to mitigate self-selection bias, or bias generated for specific job market skills provided in top-ranked universities. Location and major chosen are determinants of the variation in wages. The results are adjusted by these factors.