Study: More education equals more wage growth

Graduate degree holders may be edging out those with only a four-year degree

Rob Valletta, vice president of Research Communications in the Economic Research Department of Federal Reserve Bank of San Francisco (FRBSF), examines the increasingly important role that education plays in finding a high-wage, high-skill job in an Economic Letter released this week.

Overall, Valletta notes, the value of a four-year degree is unquestionable—consistently leading to higher average wages for workers than if they had not pursued college. But in recent years, individuals who also hold a graduate or post-graduate degree have seen even better wage growth than their bachelor's-only peers.

Labor market trends

For his analysis, Valletta looked at the average earnings of three groups compared with the wages of workers with no post-secondary education: workers with only a four-year degree; workers with both a four-year and graduate degree; and a combined supergroup of all workers with at least a four-year degree.

Since 1979, the gap in earnings between college-educated workers and those with no post-secondary education ballooned—rising from 35% to nearly 80% higher in 2013.

However, over the same period, the relative value of holding a graduate degree increased even more. In 1979, graduate degree-holders made 11% more than workers with only a four-year degree. By 2013, the gap had widened to 30%.  

Why recent graduates from tech and military schools out-earn the Ivy League

At the most elite level, those individuals with a post-graduate degree, the gains have been even more striking. Since 2000, that group has widened its wage return over non-educated workers by 17 percentage points, versus an increase of only 6 percentage points for workers with only a bachelor's degree (Valletta, "Economic Letter," Federal Reserve Bank of San Francisco, 1/12).

Next in Today's Briefing

Around the industry: Digital library materials lawsuit may go to Supreme Court

Next Briefing

  • Manage Your Events
  • Saved webpages and searches
  • Manage your subscriptions
  • Update personal information
  • Invite a colleague