Wednesday, September 04, 2013

Does Getting A College Degree Cause Income To Rise?

See The Tuition is Too Damn High, Part II: Why college is still worth it, by Dylan Matthews of the Washington Post.

The article says that the median income for people with a bachelor's degree is $49,600 (age 25 or older as of 2011). For people who stopped with a high school diploma it is $28,600.

But the article raises two interesting questions about whether or not the extra education caused the higher incomes
"But that alone doesn’t tell you that college is causing those earnings differentials. Maybe it’s just that naturally smart people tend both to get a lot of education and to earn a lot, but the two aren’t actually related. For example, Mark Zuckerberg and Bill Gates both went to Harvard and became billionaires, the theory goes, because they were smart. Harvard didn’t cause their riches. They dropped out before earning degrees, in fact. Their smarts caused both Harvard and the riches."
"There’s another strand of criticism that alleges that whatever effect college has on wages is an effect of signaling. It’s the degree that matters, as a way to tell employers you’re smart and accomplished, rather than what you learn in pursuit of the degree, under this theory. Note, first of all, that this doesn’t really negate the finding that college causes higher earnings. It just presents a slightly cynical explanation of how it is that college causes that earnings bump."
But then the article goes on further to describe some research that shows that, yes, the extra education does cause incomes to rise, over and above what you might expect even when you take the above issues into account.

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