The Human Capital Effect of General Education Development Certificates on Low Income Women

Abstract

This study examines the impacts of the General Equivalency Diploma (GED) certificate and other secondary and post-secondary credentials on labor market outcomes for women. It uses data from the NLSY Mother and Children file and the Washington State Family Income Study (FIS). Correcting for sample selection and endogeneity bias of welfare recipiency, we find that one cannot distinguish between secondary dropouts, GED recipients, and secondary graduates in hours of work. Results on hourly wage rates are mixed. For the FIS sample, GED recipients, secondary graduates, and secondary dropouts earn the same wage. For the NLSY, GED recipients fare better than dropouts, but worse than secondary graduates. Job experience explains the wage gap between GED recipients and graduates, but its explanatory power is dominated by controlling for years of education or AFQT. Differences in years of education and AFQT scores are responsible for the observed wage differences among GED recipients, secondary graduates, and secondary dropouts.