The Opportunity Cost of a PhD: Spending your Twenties

This paper examines the opportunity cost of pursuing a PhD by tracing the earnings trajectories of graduate students from undergraduate study through doctoral training and into the labour market. Using linked Canadian administrative and census data, we compare PhD graduates to those who complete a master’s degree, to professional degree holders, and to individuals who enter but do not complete a PhD. We find that PhD graduates earn significantly less than their peers early in their careers due to delayed labour market entry. Over time, their earnings recover and eventually surpass those of master’s graduates - but primarily among those who obtain academic positions and remain employed later in life. This "double premium" reflects both higher earnings conditional on full-time academic employment and longer labour force attachment. By contrast, the most substantial penalties accrue to non-completers who withdraw late from PhD programs. Finally, we document worsening outcomes for recent PhD graduates, driven largely by declining rates of academic employment. These findings highlight the central role of career timing, labour force attachment, and access to academic positions in shaping the economic returns to doctoral education.