Working Paper: NBER ID: w0820
Authors: Richard B. Freeman
Abstract: This paper analyses the changing economic value of higher education in the major O.E.C.D. countries. The first part of the study examines data on earnings by education or earnings in occupations composed of per- sons with different educational attainments. A second part looks at un- employment rates and the occupations attained by college graduates. Both the relative earnings data and the unemployment and occupational attainment data suggest that the heralded decline in the economic value of higher education in the U.S. is not a unique North American phenomenon, but rather, a general development throughout the developed world. On the basis of evidence on elasticities of substitution and the observed growth in the supply of college graduates the paper suggests that the decline in the premium to the educated reflects movement along a reasonably well-defined demand for graduates schedule due to the growth of the college and university systems of the various countries.
Keywords: Higher Education; Economic Value; Labor Market; OECD Countries
JEL Codes: I21; J24
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| increase in relative supply of graduates (J24) | decrease in economic advantage of higher education (D29) |
| decline in university premium (D29) | movement along demand schedule for graduates (J20) |
| trade union interventions (J51) | maintenance of earnings for less educated workers (J31) |
| decline in economic position of highly educated workers (F66) | decline in economic advantages of higher education (D29) |
| decline in economic advantages of higher education (D29) | noticeable declines in earnings of graduates (D29) |