Abstract
This study extends the analysis of the economic return of college education up to 10 years after college education and further examines the impact of college education on graduates’ hours of work. The results suggest that variation in hours of work explains a portion of earnings differentials among college graduates. Graduates from high-quality private institutions tend to work longer hours than their peers from other types of institutions. Female graduates spend fewer hours working than their male counterparts. As far as family background is concerned, graduates from high-income families tend to work longer hours and first-generation college graduates tend to work fewer hours. Finally, business majors seem to work longer hours while health and public affair majors less hours.
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Notes
This static labor supply model is discussed extensively in the literature of labor economics. See, for example, Blundell and MaCurdy (1999), for a review of different models of labor supply and the elasticity of individual and aggregate labor supply. See also MaCurdy et al. (1990) for a detailed discussion on the empirical evidence and methods used to estimate the impact of wage rate on hours of work.
To examine the dynamics between the wage rate and hours of work, I estimate two models. In the first model, I restrict the sample to those full-time workers who reported their earnings in terms of hourly wage rates. For example, 783 out of the 6,426 individuals in the 1997 sample did so. Adding the hourly wage rate as an additional independent variable to the hours of work equation (which is discussed in next section) verifies that as the hourly wage rate increases, individuals tend to work more hours. In the second model, I use the whole sample of full-time workers and added the hourly income in the hours of work equation, its coefficient turned out to be negative, which is not a surprise given the relationship between earnings, hours of work, and hourly income and the possibility of division bias (Borjas 1980). These findings confirmed the analytical approach of the current study, i.e., the hourly income is not assumed to be predetermined; instead, it is viewed as the realized income per hour, which is determined by the salary and hours of work.
Restricted-use data of B&B study are available from NCES. More information about NCES data licensing and other issues is available at http://www.nces.ed.gov
The selection criteria here are more inclusive than those used in Thomas and Zhang (2005). For example, their study excluded students with subsequent degrees after their B.A. completion, while this analysis includes dummy variables to indicate post-B.A. degree completion.
Computing wage rate this way might create problems when there is measure error in reported hours of work in empirical analysis. See for example, Borjas (1980) for a detailed discussion on this issue. However, because the current analysis examines the relationship between hourly income and other individual and institutional factors, the possible measurement error in hours of work is less a problem than in studies that examine the relationship between wage rate and hours of work.
These coefficients are slightly different from Thomas and Zhang (2005) because different sample criteria and model specifications are used; however, the qualitative results are same.
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Zhang, L. The Way to Wealth and the Way to Leisure: The Impact of College Education on Graduates’ Earnings and Hours of Work. Res High Educ 49, 199–213 (2008). https://doi.org/10.1007/s11162-007-9080-5
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DOI: https://doi.org/10.1007/s11162-007-9080-5