Private High School Choice and the Returns to Private Schooling
by John Z. Smith Jr. (May 1996)
This paper analyzes the magnitude of earnings differentials and differences in the rates of return to education for individuals who attended private and public high schools in the U.S. from 1976 to 1983, controlling for self-selection into school sector, as well as observed differences in family background, ability, and characteristics of the high school attended. I develop a model of school choice, educational attainment and earnings determination that allows both the returns to observable characteristics and potential selection biases to vary across private and public school attendees. Using data from the National Longitudinal Survey of Youth and dat on private high school affiliations and tuition and fees at the county level, I estimate an endogenous switching regressions model of school choice and wage determination in which years of schooling is endogenous. I find that private school students enjoy significantly higher rates of return to education at all levels.