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Individual Returns to a PhD Education in the Netherlands: Income Differences between Masters and PhDs

Author

Listed:
  • Marc van der Steeg

    (CPB Netherlands Bureau for Economic Policy Analysis)

  • Karen van der Wiel

    () (CPB Netherlands Bureau for Economic Policy Analysis)

  • Bram Wouterse

    (CPB Netherlands Bureau for Economic Policy Analysis)

Abstract

in this paper we investigate the individual returns to a doctorate education in the Netherlands over the first twenty years of a career. We compare monthly incomes of PhDs to that of Master graduates with the same years of experience, gender and field of study and who took the same time to obtain a Master degree. The latter covariate can be seen as a measure of ability. It turns out that over the first twenty years of experience, the average annual return (AAR) to a PhD education is not significantly different from zero. During the PhD track and the first years after PhD graduation PhDs earn less than Masters, but this initial investment is compensated by higher earnings in later years. Extrapolation of the return suggests an average annual return to a PhD education over the entire career of six percent. Similarly, the internal rate of return (IRR) – an alternative measure that takes both the timing and level of income differences into account - would equal nine percent over the entire career. Returns to a PhD education differ strongly by sex. Female PhDs experience a positive annual return of ten percent over the first twenty years after graduation, whereas male PhDs experience a negative return of seven percent. Positive returns for women are largely driven by the fact that they tend to work more hours than female Master graduates.

Suggested Citation

  • Marc van der Steeg & Karen van der Wiel & Bram Wouterse, 2014. "Individual Returns to a PhD Education in the Netherlands: Income Differences between Masters and PhDs," CPB Discussion Paper 276, CPB Netherlands Bureau for Economic Policy Analysis.
  • Handle: RePEc:cpb:discus:276
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    File URL: https://www.cpb.nl/sites/default/files/publicaties/download/cpb-discussion-paper-276-individual-returns-phd-education-netherlands_0.pdf
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    References listed on IDEAS

    as
    1. Jacob A. Mincer, 1974. "Introduction to "Schooling, Experience, and Earnings"," NBER Chapters,in: Schooling, Experience, and Earnings, pages 1-4 National Bureau of Economic Research, Inc.
    2. Laudeline Auriol, 2007. "Labour Market Characteristics and International Mobility of Doctorate Holders: Results for Seven Countries," OECD Science, Technology and Industry Working Papers 2007/2, OECD Publishing.
    3. Laudeline Auriol, 2010. "Careers of Doctorate Holders: Employment and Mobility Patterns," OECD Science, Technology and Industry Working Papers 2010/4, OECD Publishing.
    4. Yoram Ben-Porath, 1967. "The Production of Human Capital and the Life Cycle of Earnings," Journal of Political Economy, University of Chicago Press, vol. 75, pages 352-352.
    5. Nigel C. O’Leary & Peter J. Sloane, 2005. "The Return to a University Education in Great Britain," National Institute Economic Review, National Institute of Economic and Social Research, vol. 193(1), pages 75-89, July.
    6. Laudeline Auriol & Max Misu & Rebecca Ann Freeman, 2013. "Careers of Doctorate Holders: Analysis of Labour Market and Mobility Indicators," OECD Science, Technology and Industry Working Papers 2013/4, OECD Publishing.
    7. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1.
    8. Isabelle Recotillet, 2007. "PhD Graduates with Post-doctoral Qualification in the Private Sector: Does It Pay Off?," LABOUR, CEIS, vol. 21(3), pages 473-502, September.
    9. Roach, Michael & Sauermann, Henry, 2010. "A taste for science? PhD scientists' academic orientation and self-selection into research careers in industry," Research Policy, Elsevier, vol. 39(3), pages 422-434, April.
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    1. repec:oup:scippl:v:44:y:2017:i:1:p:1-12. is not listed on IDEAS

    More about this item

    JEL classification:

    • I20 - Health, Education, and Welfare - - Education - - - General
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

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