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Natives, the Foreign-Born and High School Equivalents: New Evidence on the Returns to the GED

  • Clark, Melissa A.

    (affiliation not available)

  • Jaeger, David A.

    ()

    (CUNY Graduate Center)

In this paper we explore the labor market returns to the General Education Development exam, or GED. Using new data from the Current Population Survey, we examine how the return to the GED varies between U.S. natives and the foreign-born. We find that foreign-born men who hold a GED but received all of their formal schooling outside of the U.S. earn significantly more than either foreign-schooled dropouts or individuals with a foreign high school diploma. For foreign-born men with some U.S. schooling, earning a GED brings higher wages than a traditional U.S. high school diploma, although this difference is not statistically significantly different from zero. These patterns stand in contrast to those for U.S. natives, among whom GED recipients earn less than high school graduates but significantly more than dropouts. The effects for natives appear to become larger over the life cycle and do not seem to be due to cohort effects. While it is difficult to attach a purely causal interpretation to our findings, they do indicate that the GED may be more valuable in the labor market than some previous research suggests.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 477.

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Length: 34 pages
Date of creation: Apr 2002
Date of revision:
Publication status: published in: Journal of Population Economics, 2006, 19 (4), 769-793
Handle: RePEc:iza:izadps:dp477
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  1. Tyler, John H. & Murnane, Richard J. & Willett, John B., 2003. "Who benefits from a GED? Evidence for females from High School and Beyond," Economics of Education Review, Elsevier, vol. 22(3), pages 237-247, June.
  2. Jaeger, David A & Page, Marianne E, 1996. "Degrees Matter: New Evidence on Sheepskin Effects in the Returns to Education," The Review of Economics and Statistics, MIT Press, vol. 78(4), pages 733-40, November.
  3. David Card & Alan Krueger, 1990. "Does School Quality Matter? Returns to Education and the Characteristics of Public Schools in the United States," Working Papers 645, Princeton University, Department of Economics, Industrial Relations Section..
  4. Jaeger, David A., 2002. "Estimating the Returns to Education Using the Newest Current Population Survey Education Questions," IZA Discussion Papers 500, Institute for the Study of Labor (IZA).
  5. Hungerford, Thomas & Solon, Gary, 1987. "Sheepskin Effects in the Returns to Education," The Review of Economics and Statistics, MIT Press, vol. 69(1), pages 175-77, February.
  6. Julian R. Betts & Magnus Lofstrom, 2000. "The Educational Attainment of Immigrants: Trends and Implications," NBER Chapters, in: Issues in the Economics of Immigration, pages 51-116 National Bureau of Economic Research, Inc.
  7. Friedberg, Rachel M, 2000. "You Can't Take It with You? Immigrant Assimilation and the Portability of Human Capital," Journal of Labor Economics, University of Chicago Press, vol. 18(2), pages 221-51, April.
  8. Richard J. Murnane & John B. Willett & John H. Tyler, 2000. "Who Benefits from Obtaining a GED? Evidence from High School and Beyond," The Review of Economics and Statistics, MIT Press, vol. 82(1), pages 23-37, February.
  9. Griliches, Zvi, 1977. "Estimating the Returns to Schooling: Some Econometric Problems," Econometrica, Econometric Society, vol. 45(1), pages 1-22, January.
  10. Cameron, Stephen V & Heckman, James J, 1993. "The Nonequivalence of High School Equivalents," Journal of Labor Economics, University of Chicago Press, vol. 11(1), pages 1-47, January.
  11. Layard, Richard & Psacharopoulos, George, 1974. "The Screening Hypothesis and the Returns to Education," Journal of Political Economy, University of Chicago Press, vol. 82(5), pages 985-98, Sept./Oct.
  12. Bernt Bratsberg & James F. Ragan Jr., 2002. "The Impact of Host-Country Schooling on Earnings: A Study of Male Immigrants in the United States," Journal of Human Resources, University of Wisconsin Press, vol. 37(1), pages 63-105.
  13. Spence, A Michael, 1973. "Job Market Signaling," The Quarterly Journal of Economics, MIT Press, vol. 87(3), pages 355-74, August.
  14. Card, David, 1999. "The causal effect of education on earnings," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 30, pages 1801-1863 Elsevier.
  15. Belman, Dale & Heywood, John S, 1991. "Sheepskin Effects in the Returns to Education: An Examination on Women and Minorities," The Review of Economics and Statistics, MIT Press, vol. 73(4), pages 720-24, November.
  16. John H. Tyler & Richard J. Murnane & John B. Willett, 2000. "Estimating The Labor Market Signaling Value Of The GED," The Quarterly Journal of Economics, MIT Press, vol. 115(2), pages 431-468, May.
  17. Jaeger, David A, 1997. "Reconciling the Old and New Census Bureau Education Questions: Recommendations for Researchers," Journal of Business & Economic Statistics, American Statistical Association, vol. 15(3), pages 300-309, July.
  18. Thomas J. Kane & Cecilia Elena Rouse, 1999. "The Community College: Educating Students at the Margin between College and Work," Journal of Economic Perspectives, American Economic Association, vol. 13(1), pages 63-84, Winter.
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