Estimating the Returns to a Secondary Education for Female Dropouts.

DOCUMENT RESUME UD 031 047 Maloney, Tim Estimating the Returns to a Secondary Education for Female Dropouts. Wisconsin Univ., Madison. Inst. for Research on Poverty. Department of Health and Human Services, Washington, D.C. IRP-DP-937-91 Feb 91 46p. Institute for Research on Poverty, 1180 Observatory Dr., Madison, WI 53706 ($3.50). Reports Research/Technical (143) MF01/PCO2 Plus Postage. *Dropouts; Economic Status; Educational Attainment; *Employment Potential; Estimation (Mathematics); *Females; *High School Equivalency Programs; Income; *Reentry Students; Sampling; *Secondary Education; Sex Differences; Statistical Bias National Longitudinal Survey of Youth Data from the National Longitudinal Survey of Youth are used to estimate empirically the impact on the earnings capacities of young female dropouts if they were to return to complete either a regular high school education or a General Educational Development (GED) degree. To reduce the potential upward bias on these estimated rates of return, dropouts are allowed to have lower levels of innate ability and lower rates of human capital accumulation in school. After controlling for the sample selection bias associated with the observation of wage rates among only employed women, the rates of return for the average dropout are estimated to be 10.2% for a high school diploma and 6.2% for a GED degree. After allowing for self-selection in the decision of whether or not to comIlete a secondary education, these estimated rates of return actually rise slightly to 10.9% and 6.5% respectively. Because of differences in other productivity characteristics, this education would only eliminate up to one-third of the substantial gap that already exists between the earnings capacities of dropouts and secondary school completers. (Contains 8 tables and 16 references.) (Author/SLD) Reproductions supplied by EDRS are the best that can be made * * from the original document. * *********************************************************************** University of Wisconsin-Madison Institute for Research on Poverty Discussion Papers 1/0/\111kTim Maloney 111 ESTIMATING TEE RETURNS TO A SECONDARY EDUCATION FOR FEMALE DROPOUTS