Earnings Premium Research Articles

Overeducation and economic mobility

We assess the hypothesis that declining intergenerational economic mobility in Norway is attributable to a rising signaling value of education accompanied by more overeducation particularly among upper-class offspring. We identify five empirical facts that together point in this direction:• The educational earnings premium has risen, but only through the extensive (employment) margin.• The rising earnings premium is associated with completed degrees only. When educational attainment is measured as time actually invested, the premium has declined.• Both educational attainment and the labor market's skill-requirements (as predicted by the occupational distribution) have increased, but attainment has risen faster than requirements such that the incidence of overeducation has increased.• There is a steep positive social gradient in overeducation: Overeducation is more frequent and has risen faster among offspring in upper-class families.• There is a steep negative social gradient in non-employment: Non-employment is more frequent and has risen faster among offspring in lower-class families.

Horizontal educational mismatch among Indonesian graduates: is there any earnings penalty?

ABSTRACT This study examines the determinants and earnings effects of horizontal educational mismatch (HEM) among Indonesian graduates. We found that almost half of Indonesian workers mismatched their field of study. The earnings effect of this mismatch varies in each field of study group. We found an earnings premium for ISCED Code 01, 02, 05, 08, and 09 HEM workers. In contrast, HEM workers in ISCED Code 04, 06, 07, and 10 fields of study suffered an earnings penalty. Mere HEM workers in the ISCED Code 06 and 10 groups earn more than workers with undereducated or overeducated horizontal mismatch.

Is There Still a Catholic Earnings Premium for Men? Evidence From Australia

ABSTRACTStudies using large‐scale survey data from Australia, Germany, and the United States have found evidence that religious affiliation influences earnings, with Catholic men benefitting from a wage premium. This paper examines religious affiliation and human capital formation for males aged 25 and 54 using six waves of data from the Household Income Labour Dynamics Australia (HILDA) survey. This study examines the impact of religious affiliation on male earnings through three main approaches: (i) estimating male earnings functions using various religious groupings, (ii) stratifying the analysis by wave to detect potential changes over time, and (iii) evaluating differences in the return to human capital investment among Anglicans, Catholics, and men with other religious affiliations. Contrary to existing studies, we find no evidence of a Catholic wage premium.

The Impact of Peacekeeping on Post-Deployment Earnings for Swedish Veterans

ABSTRACT We study the effect of peacekeeping on post-deployment earnings for military veterans. Using Swedish administrative data, we follow a sample of more than 11,000 veterans who were deployed for the first time during the period 1993-2010 for up to nine years after returning home. To deal with selection bias, we use difference-in-differences propensity score matching based on a rich set of covariates, including measures of individual ability, health and pre-deployment labour market attachment. We find that, overall, veterans’ long run post-deployment earnings are largely unaffected by their service. As such, our findings challenge the notion that Swedish veterans struggle on the labour market. At the same time, we find indications that the zero effect for the full sample hides interesting patterns in the effects from deployment, across sub-groups of veterans. Veterans deployed to Bosnia in the 1990s appear to have suffered a transitory earnings penalty, whereas veterans deployed to Afghanistan in the 2000s, as well as veterans with below average cognitive ability, and veterans with low-educated parents, appear to have earned a long run earnings premium.

Heterogeneity, selection, and the policy effect of educational expansion on college graduate earnings in China, 1981–2015

This article examines the impact of social origin on the returns to college education in the context of China’s higher education expansion since 1999. Utilizing a double-treatment setting, a marginal treatment effect framework is adopted to estimate the causal effect of college education on earnings, while a difference-in-differences methodology identifies the policy effect of educational expansion on the college premium. Analysis of data from a series of nationally representative Chinese surveys reveals that the “true” college earnings premium is rather small for the post-expansion cohort, and that much of the observed earnings gap between college and high school graduates after the expansion is due to returns to unobserved abilities. Further analysis shows that the college earnings premium after the expansion declines more for rural-origin children with schooling probabilities in the top percentiles than for their urban counterparts.

Higher Education Expansion and Earnings Premium: A Comparative Study of Two Systems in China

Higher Education Expansion and Earnings Premium: A Comparative Study of Two Systems in China

Educational and gender heterogeneity of the rural-urban earnings premium: New evidence from Norway

We explore urban earnings premiums for young, native, rural-to-urban movers in Norway. Using an augmented difference-in-differences estimator (DiD-TR) on microdata we challenge previous claims about urban earnings premium's size and sources. Conventional econometric estimators understate the static premium and overstate dynamic premiums. We find that migrants exhibit lower mean but faster pre-move earnings growth than non-migrants. Post-move, the static earnings premium dominates. The observed trajectory is related to frequent pre-move changes of industrial sector, presumably to obtain better job-worker matches. Post-move, these changes occur less frequently. Highly educated females exhibit largest static premiums (34%), less-educated females least (24%), males an intermediate amount. Our findings suggest that cities primarily generate earnings premiums through agglomeration-based efficiencies and superior job-worker matches varying heterogeneously by education and gender.

When pretty hurts: Beauty premia and penalties in eSports

This paper explores the classic beauty premium paradigm in the eSports Overwatch League. Using two-step probit selection models and unsupervised machine learning algorithms, we find that professional gamers rated as more attractive are more likely to receive a contract in the following year, controlling for productivity and other factors. However, there is no apparent lifetime earnings premium. Regression and cluster analyses reveal that it is not enough to be a good player – the inter-relatedness of productivity, attractiveness, and popularity on social media dictates employability. Looking at the league's wealthiest, most successful, and most appealing teams, we find that attractiveness on its own is a negative predictor of getting hired.

Early Career Paths of Economists Inside and Outside of Academia

Economics job candidates face considerable professional and financial uncertainties when deciding between academic and nonacademic career paths. Using novel panel data, we provide a broad picture of PhD economists’ early career mobility and earnings growth–both in and outside of academia. We find that academic jobs have fallen to just over half of US placements, with growing shares in tech, consulting, and government. We document considerable early career job mobility and higher earnings growth among job changers, private-sector economists, and men. We also find an earnings premium for graduates of top-ranked PhD programs that grows over early career years in academia while shrinking in the private sector. These different earnings dynamics mean the opportunity cost (in terms of potential earnings) of remaining in academia is generally less for graduates of top-ranked programs, although there is significant dispersion in mid-career earnings among these academics.

Exploring Brain Gain Potential: Overseas Work Experience and Return Migrant Income in Indonesia

This study aims to analyze the effect of overseas work experience and education level on the income of return Indonesian Migrant Workers (purna PMI) compared to non-PMI. The unit of analysis used is workers aged 20-40 years who are relatively young and have long career paths. The data used is Sakernas of August 2021, and the analytical method used is the Two Step Heckman Method to overcome selectivity bias problems. The results show that the achievement of human capital purna PMI is not better than non-PMI, where most purna PMI have low education, and only a few are highly educated. The results of the inferential analysis show that only highly educated purna PMI earn a higher income of 19.5% compared to non-PMI (earnings premium), reflecting the brain gain effect. In contrast, purna PMI with low education has a lower income of 9.01% (earnings penalty) compared to non-PMI with the same level of education.

Is a PhD worth more than a Master’s in the UK labour market? The role of specialisation and managerial position

ABSTRACT This paper examines the potential earnings premium associated with a doctoral degree (PhDs, ISCED9) over postgraduate degrees (PGs, or Masters, ISCED7) in the UK. We assess this premium using a decade-worth of UK Labour Force Survey data (2011–2020). To explore the possible endogenous choice of post-graduate tracks, this paper deploys linear regression, (ordinary least squares, OLS), propensity score matching (PSM), and inverse probability weighting (IPWRA) to estimate the pay premium under varying identifying assumptions. The estimates show a positive return in terms of gross hourly pays in all models, along with a relevant role of managerial positions and degree of specialisation in employment position. Therefore, although a PhD is arguably mostly driven by taste for scientific pursuit, a PhD has on average also an economic pay-off. However, much of it depends on one’s capacity to acquire leadership positions – the most relevant factor disentangling those fulfilling or not their potential in terms of wages. We also provide a cost–benefit analysis over a life course showing that such a premium is overall modest, but subject to positive spikes for those in Science & Technology (STEM disciplines), getting managerial positions, and for women. Our findings suggest investigating further those personal and organisational factors that are conducive of unleashing highly educated potential.

Social Work Licensure: Earnings Premium and Gender Disparity

Previous articleNext article FreeSocial Work Licensure: Earnings Premium and Gender DisparityJeounghee Kim, Michael Myungkook Joo, and Laura CurranJeounghee Kim Search for more articles by this author , Michael Myungkook Joo Search for more articles by this author , and Laura Curran Search for more articles by this author PDFPDF PLUS Add to favoritesDownload CitationTrack CitationsPermissionsReprints Share onFacebookTwitterLinkedInRedditEmail SectionsMoreDetailsFiguresReferencesCited by Journal of the Society for Social Work and Research Just Accepted Published for the Society for Social Work and Research Article DOIhttps://doi.org/10.1086/717330 Views: 217 HistoryAccepted September 14, 2021 PDF download Crossref reports no articles citing this article.

Earnings information and public preferences for university tuition: Evidence from representative experiments

Higher education finance depends on the public’s preferences for charging tuition, which may be partly based on beliefs and awareness about the university earnings premium. To test whether public support for tuition depends on earnings information, we devise survey experiments in representative samples of the German electorate (N > 15,000). The electorate is divided, with a plurality opposing tuition. Providing information on the university earnings premium raises support for tuition by 7 percentage points, turning the plurality in favor. The opposition-reducing effect persists two weeks after treatment. While there is some evidence of information-based updating of biased beliefs, the effect seems to mainly work through increased salience which triggers reduced consideration of financial constraints when forming preferences for tuition. Information on fiscal costs and unequal access does not affect public preferences. We subject the baseline result to various experimental tests of replicability, robustness, heterogeneity, and consequentiality.

High-Pressure, High-Paying Jobs?

Abstract Work-related stress has reportedly increased over time. Using worker-level survey and experimental data, we investigate the labor market consequences of work pressure. We build a measure of pressure strongly associated with adverse health outcomes and show that pressure comes with a sizable earnings premium, reflecting workers' willingness-to-pay to avoid pressure. As expected, we do not find a premium among civil servants who face strong labor market frictions. Our experimental evidence is consistent with workers sorting into high-pressure jobs and with a sizable market-level compensating differential. Differences in the prevalence and valuation of work pressure explain substantial shares of wage inequality.

Revising the Racial Wage Gap Among Men in the United States: The Role of Nonemployment, Underemployment, and Incarceration

This article examines trends in racial earnings disparities to observe how the socially constructed concept of race impacts the U.S. labor market for men from 1981 to 2008. I develop a racial earnings gap measure that accounts for the labor market experience of the nonemployed using Survey of Income and Program Participation (SIPP) Completed Gold Standard data produced by the U.S. Census Bureau. This data set includes administrative earnings data from the Internal Revenue Service and the Social Security Administration merged with SIPP household survey data. Conventional measures that do not account for the nonemployed miss the impact of an increasing number of nonemployed, prime working-age men, particularly Black men, and the accelerating incarceration rate during the 1980s-1990s. An unadjusted estimate of the White earnings premium indicates a large racial earnings gap that fluctuates between about 140% and 150% over 1981-2008. This suggests that labor market conditions and policies may be limiting, but not reducing, racial earnings inequality. The adjusted White earnings premium averages 28 percentage points higher over the time period of this study. The premium also rises further, more quickly, and sustains this higher level longer. The adjusted measure suggests that labor market conditions and policies continue to produce growing levels of racial earnings inequality.

The winner’s curse? Temporal and spatial impacts of higher education expansion on graduate employment and social mobility

ABSTRACT The massification of higher education has dramatically changed the association between credentials and jobs in advanced countries, while its impacts in transitional economies have received less academic attention. To address this research lacuna, the paper utilizes rich information from China’s national surveys of college graduates from 2003 to 2019 and multiple waves of census data to explore the temporal and spatial effects of tertiary education expansion on college graduates’ job sorting. Regression results from the fixed effects model and the two-stage least-squares model indicate that, on the temporal dimension, the higher education expansion has weakened ties between college credentials and quality jobs over the past 20 years. Recent graduates are more likely to work in informal, non-urban, and non-public sectors, and the college earnings premium has also declined. There is a persistent gap in employment outcomes between bachelor’s and associate degree holders. On the spatial dimension, the growing enrolment size leads to skill sorting towards low skilled regions. The study argues that the dynamic effects of college credentials may be explained by labour market flexibility and cohort crowding after higher education expansion. This paper calls for a critical reflection on the merit of further massification of higher education in developing economies, regarding its potential impacts on intergenerational inequality and regional inequality.

JUE insight: The role of establishment size in the city-size earnings premium

Both large establishments and large cities are known to offer workers an earnings premium. In this paper, we show that these two premia are closely linked by documenting a new fact: when workers move to a large city, they also move to larger establishments. We then ask how much of the city-size earnings premium can be attributed to transitions to larger and better-paying establishments. Using administrative data from Spain, we find that 38 percent of the city-size earnings premium can be explained by establishment-size composition. Most of the gains from the transition to larger establishments realize in the short-term upon moving to the large city. Establishment size explains 29 percent of the short-term gains, but only 5 percent of the medium-term gains that accrue as workers gain experience in the large city. The small contribution to the medium-term gains is due to two facts: first, within large cities workers transition to large establishments only slightly faster than in smaller cities; second, the relationship between earnings and establishment size is weaker in large cities.

The STEM Wage Premium Across the OECD

Using data from the Program for the International Assessment of Adult Competencies, this paper compares the earnings premium and employment share of jobs in Science, Technology, Engineering and Mathematics (STEM) across 11 member countries of the Organisation for Economic Co-operation and Development. The results reveal that the STEM wage premium is higher in the United States than in any of the other comparison countries, despite the fact that the U.S. has a larger share of workers in STEM jobs. We also find evidence that the premium varies significantly across STEM sub-fields and education levels, and that the premium tends to be higher in countries with lower unionization rates, less employment protection, or a larger share of employment in the public sector.

Pengaruh Pendapatan Premi, Beban Klaim, Risk Based Capital, Investasi dan Dividen Terhadap Profitabilitas

This study aims to analyze the effect of earnings premium, claim expense, risk based capital, investment and dividends on profitbility general insurance company listed on the Indonesia Stock Exchange for the 2017-2021 period. This study uses secondary data obtained from the financial reports and annual reports of each company. The number of samples used was 12 general insurance company on the Indonesia Stock Exchange for the 2017-2021 period. The sampling technique used was purposive sampling with multiple linear regression analysis method with panel data. The analytical tool used in this study is Eviews. The results of research using multiple linear regression analysis with panel data show that: (1) earnings premium has a positive effect on profitbility, (2) claim expense has a negative effect on profitbility, (3) risk based capital has a positive effect on profitbility, (4) investment has a positive effect on profitbility, (5) dividends has a negative effect on profitability.

New Canadians Working amid a New Normal: Recent Immigrant Wage Penalties in Canada during the COVID-19 Pandemic.

The global coronavirus disease 2019 (COVID-19) pandemic has exposed and arguably intensified many existing inequalities. This analysis explores the relationship between recent immigrant earnings and the pandemic. Specifically, we attempt to empirically answer the question "Has the COVID-19 pandemic exacerbated (or mitigated) recent immigrant-non-immigrant employment and wage gaps?" We find that the pandemic did not change the labour force activity profile of recent or long-term immigrants. Moreover, the pandemic did not disproportionately disadvantage recent immigrants' earnings. In fact, recent immigrant men who were employed during the COVID-19 crisis experienced a small but statistically significant earnings premium. This was insufficient, however, to overcome the overall earnings discount associated with being a recent immigrant. In addition, we find that the recent immigrant COVID-19 earnings boost is observable only at and below the median of the earnings distribution. We also use Heckman selection correction to attempt to adjust for unobserved sample selection into employment during the pandemic. The fact that COVID-19 has not worsened recent immigrant earnings gaps should not overshadow the large, recent immigrant earnings disparities that existed before the pandemic and continue to exist regardless of the COVID-19 crisis.