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The Labor Market Returns to Advanced Degrees

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  • Joseph G. Altonji
  • Ling Zhong

Abstract

We estimate the labor market return to an MBA, a JD, and master’s in engineering, nursing, education, psychology and social work, and thirteen other graduate degrees. To control for heterogeneity in preferences and ability, we use fixed effects for combinations of field-specific undergraduate and graduate degrees obtained by the last time we observe an individual. Basically, we compare earnings before the graduate degree to earnings after the degree. We find large differences across graduate fields in earnings effects, and more moderate differences in internal rates of return that account for program length and tuition. The returns often depend on the undergraduate major. The contribution of occupational upgrading to the earnings gain varies across degrees. Finally, simple regression-based estimates of returns to graduate fields are often highly misleading.

Suggested Citation

  • Joseph G. Altonji & Ling Zhong, 2020. "The Labor Market Returns to Advanced Degrees," NBER Working Papers 26959, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:26959
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • 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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