Who benefits the most from post-secondary schooling?

Key findings

Recent research on economic returns to higher education in the United States suggests that those with the highest wage returns to a college degree are least likely to obtain one. We extend the study of heterogeneous returns to tertiary education across multiple institutional contexts, investigating how the relationship between wage returns and the propensity to complete a degree varies by the level of expansion, differentiation, and cost of higher education. Drawing on panel data and matching techniques, we compare findings from the US with selection into degree completion in Germany and the UK. Contrary to previous studies, we find little evidence for population level heterogeneity in economic returns to higher education.

Description & methods

This British Academy-funded project looked at the effect of a college or university degree on workers’ earnings, comparing the wage gains for post-secondary graduates across four countries – United States, United Kingdom and Germany.

The research team used sophisticated statistical techniques that allow the comparison between closely matched workers with and without a post-secondary degree to shed light on what policies help workers gain the most from their training, and which do not.

The three country cases were chosen to represent Esping-Anderson’s (1990;1999) different “types” of welfare capitalism: The UK and the US represent “liberal” welfare state regimes, Germany represents the “corporatist-statist” regime.

Making use of panel data sources with substantial overlap in design and time period, and looking at men only, the project explored the economic returns to completing post-secondary education and compares those returns in three countries: the United States, the United Kingdom and Germany.

USA – Panel Study of Income Dynamics and the National Longitudinal Survey of Youth
UK – National Child Development Study
Germany – German Socio-Economic Panel Study combined with additional statistics from the German Mikrozensus and the National Educational Panel Study