NCPA - National Center for Policy Analysis

ECONOMIC RETURNS ON HIGHER-ED DIPLOMAS

March 11, 2008

Advanced education is essential.  Plus, the economic returns on an advanced degree and the penalties for lack of it keep increasing, according to "Education and Economic Mobility," a new study by the Brookings Institution.

For example:

  • The inflation-adjusted median family income for adults ages 30-39 with a graduate degree was 80 percent higher in 2006 than in 1964.
  • For those with a four-year college degree, it was almost 60 percent higher.
  • But incomes for those with a high school education or less have remained virtually unchanged over the same period.

Stated otherwise, the gap in real family income between adults with a graduate degree and those with only a high school diploma is four times as great today as 40 years ago:

  • Only 16 percent of those coming from homes in the bottom fifth income ranking in the nation remained at this level if they got a college degree.
  • Some 42 percent moved up to the top two-fifths.
  • However, 45 percent of those without a college degree with parents earning in the bottom fifth remained at this level.

Given that most everyone's economic future is critically hinged to getting an advanced education, it's logical to ask why anyone who cared about earning potential would forgo this, asks columnist Star Parker.

According to Ron Haskins, one of the authors of the study, "The greatest single influence on school achievement is family background."  The best way to earn more than your low-income parents is to complete higher education.  And the most likely predictor that an individual will not get this education is that he or she comes from a low-income family.

Source: Star Parker, "Economic Returns on Higher-Ed Diplomas," Dallas Morning News, March 10, 2008; based upon: Julia B. Isaacs, Isabel V. Sawhill and Ron Haskins, "Getting Ahead or Losing Ground: Economic Mobility in America," Brookings Institution, February 2008.

For study:

http://www.brookings.edu/~/media/Files/rc/reports/2008/02_economic_mobility_sawhill/02_economic_mobility_sawhill.pdf 

 

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