Economics in the Real World Earnings in the US (2000 Census data) Popn and YRFT workers, '99 Popn Total Emp’d 21 to 64 years YRFT % emp'd 159m 117m 73.5 86m YRFT % med $ 54 32,717 Let’s consider how employment and median earnings vary by education level . . . (and then by age as well) . . . Source: https://www.census.gov/hhes/www/income/data/earnings/call1usboth.html ESRC Festival of Social Science, CAGE, 6/11/12 1 17% have a bachelor degree Popn and YRFT workers, 1999, aged 21-64 Higher employment rate for those with more education total no. dist % Employed Higher median earnings for those with a degree: College Wage Prem=57% % YRFT emp'd YRFT med % $ Not a high school graduate 19,543,685 12 10,109,190 52 6,528,410 33 21,332 High school graduate 44,071,390 28 31,150,550 71 23,102,845 52 27,351 Some college 48,530,160 31 37,571,090 77 27,232,610 56 31,988 Bachelor degree 26,875,435 17 22,288,790 83 17,008,095 63 42,877 Advanced degree 13,901,140 9 11,986,215 86 67 55,242 ESRC Festival of Social Science, CAGE, 6/11/12 9,319,410 2 $ 70,000 60,000 50,000 age = 21-24 40,000 age = 25-34 age = 35-44 30,000 age = 45-54 age = 55-64 20,000 10,000 0 No HS HS Some Col Degree ESRC Festival of Social Science, CAGE, 6/11/12 Adv Deg 3 Earnings rise with Education for all age groups . . . $ . . . but especially in later years. “The Jam is thicker tomorrow.” 70,000 60,000 50,000 age = 21-24 40,000 age = 25-34 age = 35-44 30,000 age = 45-54 age = 55-64 20,000 10,000 Very little growth in earnings by age for this group. 0 No HS HS Some Col Degree ESRC Festival of Social Science, CAGE, 6/11/12 Adv Deg 4 • Previously, we said that the (raw) college wage premium in the US is 57%. • What is the evidence for the UK? • Blundell et al. (EJ, 2000): 12% men, 34% women (rel. to 2+ A-levels, aged 33 in 1991). • Naylor and Smith: circa 15% for both men and women (rel. to 2+ A-levels, aged 30 in 2000) , but . . . • Substantial variation. Eg by academic attainment; ca12% for 2.2 or below, ca18% for 2.1 or above. ESRC Festival of Social Science, CAGE, 6/11/12 5 Conclusion • HE is an expensive investment • But it’s worth it . . . • . . . and the more so the more effort you put in to it. • PS Do ‘shop around’! Robin Naylor Department of Economics University of Warwick ESRC Festival of Social Science, CAGE, 6/11/12 6