Arnold Kling  

Michael Mandel's Indicator, along a Margin

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Michael Mandel writes,

college costs have kept rising, while the real earnings of young college grads have gone down since 2000. In particular, since the recession started in 2006, real tuitions and fees have skyrocketed, while real earnings have plummeted.

Pointer from Tyler Cowen. I immediately wondered if this reverses the Goldin-Katz contention that we have an undersupply of college graduates.

But of course, to answer that you have to look for marginal differences. One margin is this: what has been happening to the differential between earnings for high school grads and earnings for college grads. Mandel starts his chart in 1995, so I went here, and pulled out the current-dollar figures for 1995 and 2009.

Male college grad4885670568
Female college grad2692742128
Male high school grad2795236332
Female high school grad1535922868

[UPDATE: typo, spotted by commenter, correctedP

In 1995, the average college-educated male or female earned about 75 percent more than his or her high-school-educated counterpart. In 2009, this differential was wider, at 94 percent for males and 84 percent for females. And my guess is that it looks even better for college grads today if you compare their likelihood of being employed full time to high school grads, relative to 1995.

So, these data are indicative of a recession, as Mandel points out. However, they do not indicate a decline in the value of college education at the margin, which is what I was curious about. My guess, though, is that as a percentage of one year's tuition, the salary differential for college graduates has gone down considerably since 1995.

Comments and Sharing

COMMENTS (3 to date)
Doc Merlin writes:

The second "Female college grad" should be "Female high school grad"

Tom Grey writes:

While good, this is still not the best comparison.

"Net Worth (self created)" at ages 25, 35, 45 for college grads vs. high school grads is the key comparison.

It might well be that net worth at age 25 today, for those who graduated high school in 2002, is much much higher for non-college HS grads than for college students & grads. Probably not for age 35 folks who graduated in 1992, though possibly still close.

Of course, to really compare, you'd want similar SAT scores compared, so those with 1500-1600 who go to college vs those who don't; and other ranges. This is a huge part of the college signalling issue.

Troy Camplin writes:

I'm falling about $50,000 short. With much more than a B.A. Depressing.

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