Returns to Graduate and Professional Education: TheRoles of Mathematical and Verbal Skills by Major

Students in majors with higher average quantitative GRE scores are less likely to attend graduateschool while students in majors with higher average verbal GRE scores are more likely to attendgraduate school. This sorting effect means that students whose cognitive skills are associatedwith lower earnings at the bachelor’s level are the most likely to attend graduate school. As aresult, there is a substantial downward bias in estimated returns to graduate education.Correcting for the sorting effect raises estimated annualized returns to a Master’s or doctoraldegree from about 5% to 7.3% and 12.8% respectively. Estimated returns to professionaldegrees rise from 13.9% to 16.6%. These findings correspond to a large increase in relativeearnings received by postgraduate degree holders in the United States over the past 20 years.[...]