Researchers often identify degree effects by including degree attainment ("D") and years of schooling ("S") in a wage model, yet the source of independent variation in these measures is not well understood. We argue that "S" is negatively correlated with ability among degree-holders because the most able graduate the…

A wage models in which college-educated workers are classified according to their degree attainment, college type, and college transfer status are examined using data from the 1979 National Longitudinal Survey of Youth. Transfer students receive an 'indirect' wage benefit as changing colleges allows them to earn a degree.

National Longitudinal Survey of Youth data reveal that 35% of white males who left school between 1979 and 1988 returned by 1989. An estimated wage model shows that those who delay their schooling earned less than those with continuous schooling. The gap increased with the length of time before reenrollment. (SK)