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The Labor Market Returns to Advanced Degrees

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Listed:
  • Joseph G. Altonji
  • Ling Zhong
Abstract
We estimate the labor market return to an MBA, a JD, and master’s in engineering, nursing, education, psychology and social work, and thirteen other graduate degrees. To control for heterogeneity in preferences and ability, we use fixed effects for combinations of field-specific undergraduate and graduate degrees obtained by the last time we observe an individual. Basically, we compare earnings before the graduate degree to earnings after the degree. We find large differences across graduate fields in earnings effects, and more moderate differences in internal rates of return that account for program length and tuition. The returns often depend on the undergraduate major. The contribution of occupational upgrading to the earnings gain varies across degrees. Finally, simple regression-based estimates of returns to graduate fields are often highly misleading.

Suggested Citation

  • Joseph G. Altonji & Ling Zhong, 2020. "The Labor Market Returns to Advanced Degrees," NBER Working Papers 26959, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:26959
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    Cited by:

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    3. Boss, Daniel, 2023. "The Relationship Between the University Wage Premium and the Urban-Rural Divide in Australia," Warwick-Monash Economics Student Papers 56, Warwick Monash Economics Student Papers.
    4. Hennig, Jan-Luca, 2021. "Labor Market Polarization and Intergenerational Mobility: Theory and Evidence," VfS Annual Conference 2021 (Virtual Conference): Climate Economics 242353, Verein für Socialpolitik / German Economic Association.
    5. Carmen Aina & Daniela Sonedda, 2022. "Sooner or later? The impact of child education on household consumption," Empirical Economics, Springer, vol. 63(4), pages 2071-2099, October.
    6. Christopher T. Bennett, 2023. "Labor Market Returns to MBAs From Less‐Selective Universities: Evidence From a Field Experiment During COVID‐19," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 42(2), pages 525-551, March.
    7. Boneva, Teodora & Golin, Marta & Rauh, Christopher, 2022. "Can perceived returns explain enrollment gaps in postgraduate education?," Labour Economics, Elsevier, vol. 77(C).
    8. Daly, Moira & Jensen, Mathias Fjællegaard & le Maire, Daniel, 2022. "University Admission and the Similarity of Fields of Study: Effects on Earnings and Skill Usage," Labour Economics, Elsevier, vol. 75(C).
    9. Anna Valero, 2021. "Education and management practices," POID Working Papers 007, Centre for Economic Performance, LSE.
    10. Veronica Minaya & Judith Scott-Clayton & Rachel Yang Zhou, 2024. "Heterogeneity in Labor Market Returns to Master’s Degrees: Evidence from Ohio," Research in Higher Education, Springer;Association for Institutional Research, vol. 65(5), pages 775-793, August.
    11. Judith M. Delaney & Paul J. Devereux, 2022. "Gender Differences in STEM Persistence after Graduation," Economica, London School of Economics and Political Science, vol. 89(356), pages 862-883, October.
    12. Hugh Cassidy & Amanda Gaulke, 2024. "The increasing penalty to occupation‐education mismatch," Economic Inquiry, Western Economic Association International, vol. 62(2), pages 607-632, April.
    13. Sivropoulos-Valero, Anna Valero, 2021. "Education and management practices," LSE Research Online Documents on Economics 114436, London School of Economics and Political Science, LSE Library.
    14. Deborah M. Weiss & Matthew L. Spitzer & Colton Cronin & Neil Chin, 2024. "Why college majors and selectivity matter: Major groupings, occupation specificity, and job skills," Contemporary Economic Policy, Western Economic Association International, vol. 42(2), pages 278-304, April.

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    More about this item

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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