It’s Not Enough to Stay in School: Race and Gender Differences in the Wage Returns of Educational Attainment

Michelle J. Budig, University of Massachusetts
Misun Lim, University of Massachusetts
Melissa Hodges, University of Massachusetts
Melissa Fugiero, University of Massachusetts

Using the 1979-2010 waves of the National Longitudinal Survey of Youth (NLSY), we test whether African-Americans and Caucasians experience different returns to earnings for educational attainment. We examine multiple specifications of education: years of education, highest degree obtained, and field of degree obtained. Control variables include human capital, job characteristics, family structure, and demographic characteristics. We find African-Americans receive lower returns to education measured as highest grade completed, net of extensive control variables. Most of this racial difference in returns is concentrated among workers with graduate degrees, particularly among PhDs. Among men, whites receive significantly higher returns for MBAs and PhDs in the social sciences and humanities. Among women, whites receive significantly higher returns for graduate degrees in humanities and legal studies. Some of these racial differences are due to differential placement in occupations and industries after degree completion.