Working Paper: NBER ID: w26959
Authors: Joseph G. Altonji; Ling Zhong
Abstract: We estimate the labor market return to an MBA, a JD, and master’s in engineering, nursing, education, psychology and social work, and thirteen other graduate degrees. To control for heterogeneity in preferences and ability, we use fixed effects for combinations of field-specific undergraduate and graduate degrees obtained by the last time we observe an individual. Basically, we compare earnings before the graduate degree to earnings after the degree. We find large differences across graduate fields in earnings effects, and more moderate differences in internal rates of return that account for program length and tuition. The returns often depend on the undergraduate major. The contribution of occupational upgrading to the earnings gain varies across degrees. Finally, simple regression-based estimates of returns to graduate fields are often highly misleading.
Keywords: labor market returns; advanced degrees; graduate education; earnings; MBA; JD; fixed effects
JEL Codes: I21; I26; J24; J31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Obtaining an MBA (M19) | Increase in earnings (J31) |
| Obtaining a law degree (K29) | Increase in earnings (J31) |
| Occupational upgrading (J62) | Increase in earnings from law and medicine degrees (K29) |
| Returns operate through occupational upgrading vs within occupation (J24) | Varies across degrees (Y40) |
| Simple earnings comparisons (J31) | Misleading without controlling for undergraduate field (C93) |