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Occupations, fields of study and returns to education

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  • Thomas Lemieux

Abstract

This paper considers several possible channels behind the well‐documented effect of education on earnings. The first channel is that education makes workers more productive on a given task, as in a conventional human capital framework. The second channel is based on the idea that education helps workers get assigned to higher‐paying occupations where output is more sensitive to skill. A third and final channel is that workers are more productive and earn more when they are matched to a job related to their field of study. Using data from the 2005 National Graduate Survey and the 2006 Canadian Census, I find that channels two and three account for close to half of the conventionally measured return to education. The results indicate that the return to education varies greatly depending on occupation, field of study and the match between these two factors. Occupations, champs d'études et rendements sur l'éducation. Ce mémoire considère plusieurs canaux possibles par le truchement desquels l'effet bien documenté de l'éducation sur les gains peut se déployer. Le premier canal est que l'éducation rend les travailleurs plus productifs dans une tâche, ainsi que le suggère le modèle conventionnel de capital humain. Le second canal se base sur l'idée que l'éducation aide les travailleurs à se donner accès aux occupations les mieux rémunérées où l'extrant est davantage sensible aux différences d'habiletés. Un troisième canal serait que les travailleurs sont plus productifs et mieux rémunérés quand ils sont arrimés à un travail relié à leurs champs d'études. A partir de données tirées de l'Enquête nationale auprès des diplômés et du recensement de 2006, l'auteur découvre que les deux derniers canaux expliquent près de la moitié du rendement sur l'éducation tel que mesuré d'habitude. Les résultats indiquent aussi que le taux de rendement sur l'éducation varie grandement selon l'occupation, les champs d'étude, et l'arrimage entre ces deux facteurs.

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  • Thomas Lemieux, 2014. "Occupations, fields of study and returns to education," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 47(4), pages 1047-1077, November.
  • Handle: RePEc:wly:canjec:v:47:y:2014:i:4:p:1047-1077
    DOI: 10.1111/caje.12116
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    4. Di Paolo, Antonio & Tansel, Aysit, 2017. "Analyzing Wage Differentials by Fields of Study: Evidence from Turkey," GLO Discussion Paper Series 91, Global Labor Organization (GLO).
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    8. Fernando Rios-Avila & Fabiola Saavedra Caballero, 2019. "It Pays to Study for the Right Job: Exploring the Causes and Consequences of Education-Occupation Job Mismatch," Economics Working Paper Archive wp_922, Levy Economics Institute.
    9. Di Paolo, Antonio & Tansel, Aysit, 2017. "Analyzing Wage Differentials by Fields of Study: Evidence from Turkey," GLO Discussion Paper Series 91, Global Labor Organization (GLO).
    10. Riccardo Zago, 2020. "Job Polarization, Skill Mismatch and the Great Recession," Working papers 755, Banque de France.
    11. Jung, Jin Hwa & Lim, Dong-Geon, 2020. "Industrial robots, employment growth, and labor cost: A simultaneous equation analysis," Technological Forecasting and Social Change, Elsevier, vol. 159(C).
    12. Frances Woolley, 2018. "The political economy of university education in Canada," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 51(4), pages 1061-1087, November.
    13. Almeida, André & Figueiredo, Hugo & Cerejeira, João & Portela, Miguel & Sá, Carla & Teixeira, Pedro, 2017. "Returns to Postgraduate Education in Portugal: Holding on to a Higher Ground?," GLO Discussion Paper Series 44, Global Labor Organization (GLO).
    14. Charles M. Beach, 2016. "Changing income inequality: A distributional paradigm for Canada," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 49(4), pages 1229-1292, November.
    15. Mundra, Kusum & Rios-Avila, Fernando, 2020. "Education-Occupation Mismatch and Social Networks for Hispanics in the US: Role of Citizenship," IZA Discussion Papers 12975, Institute of Labor Economics (IZA).
    16. David J Deming & Kadeem Noray, 2020. "Earnings Dynamics, Changing Job Skills, and STEM Careers," The Quarterly Journal of Economics, Oxford University Press, vol. 135(4), pages 1965-2005.
    17. Tang, Rongsheng & Wang, Gaowang, 2021. "Educational mismatch and earnings inequality," MPRA Paper 106953, University Library of Munich, Germany.
    18. Leighton, Margaret & Speer, Jamin D., 2020. "Labor market returns to college major specificity," European Economic Review, Elsevier, vol. 128(C).
    19. Arpita Patnaik & Matthew J. Wiswall & Basit Zafar, 2020. "College Majors," NBER Working Papers 27645, National Bureau of Economic Research, Inc.
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    More about this item

    JEL classification:

    • 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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