The Returns to College Quality in Japan: Does Your College Choice Affect Your Earnings?

This paper attempted to measure the causal effect of college quality on individual earnings in subsequent life. If college quality matters, what type of college characteristics might lead to higher labor market premiums? Research conducted in US found a positive and significant labor market return from attending small, private, and Ph.D.-granting universities with highly rewarded, experienced faculty members. We basically followed the line of previous research and used the large-scale dataset of identical twins in Japan combined with the official statistics, with a wide variety of college characteristics and college selectivity. This paper shows that there is no strong evidence for the positive returns to college quality in Japan after controlling for college selectivity and unobserved individual heterogeneity, although, in some empirical specifications, the composition of full-time faculty members is regarded as an important determinant of the variation in subsequent earnings among college graduates.