Education and Personal Earnings Determination: A Synthetic Approach
O, Ook Whan
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https://hdl.handle.net/2142/68911
Description
Title
Education and Personal Earnings Determination: A Synthetic Approach
Author(s)
O, Ook Whan
Issue Date
1983
Department of Study
Education
Discipline
Education
Degree Granting Institution
University of Illinois at Urbana-Champaign
Degree Name
Ph.D.
Degree Level
Dissertation
Keyword(s)
Education, Industrial
Abstract
The purpose of this study is to examine the effects of education on personal earnings in the U.S., taking into consideration a number of mediating labor market and social stratification variables. Two effects of education are posited. The first, the "allocation effect," refers to the role that education plays in enabling people to obtain better-paying jobs. The second, the "earnings effect," concerns the way education affects earnings after a job is obtained.
This study hypothesizes that more highly educated persons are more likely to be allocated to the more advantaged ("good") jobs than less educated persons, and that education plays a more important role in the more advantaged jobs than in the less advantaged ("bad") jobs. In other words, a given level of education should yield greater earnings in the good jobs, and the rate of earnings return to education should be also higher. In addition, this study examines the advantage and disadvantage in personal earnings determination caused by social status and personal background, such as sex, race, resident area and geographical region.
Data for this study are from the March 1980 Current Population Survey (CPS). Civilians aged 15 and over who had been employed in 1979 as wage and salary workers are included. This study has one dependent variable (annual earnings) and three sets of independent variables: human capital (education and experience), labor market structural factors (industry and occupation), and social stratification (sex, race, area, and geographical region).
It was found that education is positively related to occupational and labor market allocations, but not to industrial allocation. The positive relationship of education to occupational and labor market allocation attains even when social stratification variables are controlled. It was found that rate of earnings return to education is higher in the "good" jobs (i.e., core industry, white-collar occupation, primary labor market, etc.) than in "bad" jobs (i.e., periphery industry, blue-collar occupation, secondary labor market, etc., respectively). The rate and amount were higher for men, whites, SMSA residents, and the residents of Northeastern states than for women, blacks, non-SMSA residents, and the residents of Southern states, respectively.
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