by Eli Levine
Abstract
Education and training are fundamentally linked with labor market performance. There is a significant body of work analyzing the role of education in wages with an emphasis on a comparison between a college degree and a high school diploma. However, as states have begun to shift their education policies to make community college and trade school more accessible, it is important to understand the expected labor market returns to these forms of education. In this paper, using data from the National Longitudinal Survey of Youth’s cohort that began in 1997, the returns for different levels of education using the Mincer equation are found. While there was a data limitation surrounding trade school, it was possible to analyze the impact of adding a vocational license or a training certificate to a high school diploma. When controlling for experience in three different ways, specifically by age, time at highest training and labor market experience, it was found that returns to a training certificate relative to high school are between 18.7% and 36.3% higher than a high school diploma. Furthermore for community college, the wage returns are between 26.4% and 45.8% higher relative to a high school diploma. These findings highlight that additional training and certification can be an effective tool for increasing labor market returns for high school graduates even without a bachelor’s degree.
Professor V. Joseph Hotz, Faculty Advisor
JEL Codes: I2, I26, J31
