Occupational Choice, High School Graduation, and Investment in Human Capital

High school students are exhorted to remain in high school until graduation. Our "common sense" a priori feeling that a high school diploma is a wise investment is supported by evidence showing that the rate of return to high school completion is, on average, very high. Yet the high school student often makes the conscious choice to drop out. In an effort to understand this behavior, the present value of lifetime earnings attributable to completion of high school is computed, both for broad demographic groups and for specific occupational categories. The author finds, as others have, that the return to high school graduation is, indeed, high. But what is true generally is found not to be true for specific occupations. For students who have some specific occupations in mind, high school graduation does not appear justified on economic grounds, when past cross-sectional earnings patterns are used to predict the future.