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Natives, the foreign-born and high school equivalents: new evidence on the returns to the GED

Abstract

We explore the labor market returns to the General Education Development (GED) exam for US natives and the foreign-born. We find that foreign-born men with a GED who received all of their formal schooling abroad earn significantly more than either foreign-schooled high school dropouts or graduates. In contrast, among US natives, GED recipients earn less than high school graduates but significantly more than dropouts. The returns for natives become larger over the life cycle and are not due to cohort effects. Our findings indicate that the GED may be more valuable in the labor market than some previous research suggests.

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Notes

  1. Typical years to complete secondary school are taken from the United Nations Educational, Scientific, and Cultural Organization (UNESCO) survey of national education systems. These data are available at http://www.uis.unesco.org/pagesen/DBSysCri.asp. We use the typical years required in 1990, although for nearly all countries, this remained unchanged from 1980. Some countries require 13 years of primary and secondary schooling (e.g., the UK) before conferring a secondary school degree. Because the years-of-schooling variable for GED recipients is top-coded at 12 years, we top-code the imputed years of education for the foreign-born, foreign-schooled secondary school recipients at 12 years as well. For the foreign-born, foreign-schooled, the top years of schooling category should therefore be interpreted as “12 or more.”

  2. The CPS is structured so that households are interviewed for 4 consecutive months, not interviewed for the next 8 months, and then interviewed for 4 more consecutive months. The CPS outgoing rotation groups comprise individuals in their fourth and eighth months of the survey. To avoid having a particular individual appear in our sample twice, we use only those who are in their fourth month of the survey, except for the first year, for which we take individuals who are in either their fourth or eighth month. Data were obtained from the Bureau of Labor Statistics (BLS)/Census web site at http://www.bls.census.gov/cps.

  3. We exclude individuals with more than a high school education; individuals younger than 20 or older than 64 at the time of the survey; foreign-born individuals who cannot be firmly classified as having some formal US schooling or as having only foreign formal schooling; foreign-born individuals who entered the USA prior to 1965; foreign-born individuals whose country of birth was not identified (i.e. “Other”); those living in Alaska or Hawaii; those whose ethnicity is American Indian, Aleut, or Eskimo; those born abroad to US parents or born in outlying areas; and those whose education was allocated. In addition, we exclude Canadians, as Canada also offers the GED and could confound our exploration of the returns to the GED as a postmigration credential. Because the remaining non-Mexican North American sample is extremely small (approximately 30 individuals, mostly from Bermuda) we drop them as well. Our regression samples also exclude individuals whose wages were less than $1 or greater than $200 per hour and individuals who reported that they were either self-employed or worked without pay in their main job.

  4. Because both low levels of schooling and the year of entry to the US are coded in brackets in the CPS, we are not able to identify precisely where some individuals completed their schooling. We use the year of entry and age to identify the minimum and maximum number of years the individual could have spent in the USA We also use the years-of-schooling variable to identify the minimum and maximum years of schooling that the individual could have received for the 1st–4th grade, 5th–6th grade, and 7th–8th grade categories. We code individuals as “foreign-born, foreign-schooled” (i.e., no formal US schooling) if (age—maximum years in US—6) is more than maximum years of schooling. Similarly, we code individuals as “foreign-born, some US schooling” if (age—minimum years in US—6) is less than the minimum years of schooling. We exclude from the sample individuals who were born abroad but who do not meet one of these criteria. Approximately 10% of the foreign-born fall into the “indeterminate” category, while approximately 16 percent fall into the “foreign-born, some US schooling” category, and the vast majority are categorized as “foreign-born, foreign-schooled.”

  5. Note that, unlike the decennial Census, the CPS does not ask respondents about the language spoken in their home. Categories of the CPS country-of-birth variable for which English is the primary or official language are American Samoa, Australia, the Bahamas, Belize, the Caribbean, Dominica, Fiji, Ghana, Great Britain, England, Guyana, India, Ireland/Eire, Jamaica, New Zealand, Nigeria, Northern Ireland, Pakistan, the Philippines, Puerto Rico, Scotland, South Africa, and Trinidad and Tobago. Canada and Bermuda would also be classified as English-speaking countries, but, as noted above, we exclude non-Mexican North Americans from our samples.

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Acknowledgments

The authors thank Darren Lubotsky, Anne Polivka, Bob Schoeni, Leslie Stratton, John Tyler, Diane Whitmore, participants of the labor lunch at Princeton University and seminars at the College of William and Mary, Hunter College, and IZA, as well as two anonymous referees for helpful comments. Both authors thank the Industrial Relations Section at Princeton University for financial support while they worked on this paper.

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Correspondence to David A. Jaeger.

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Responsible editor: Klaus F. Zimmermann

Appendix

Appendix

Tables 7.

Table 7 Descriptive statistics for regression samples for men and women

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Clark, M.A., Jaeger, D.A. Natives, the foreign-born and high school equivalents: new evidence on the returns to the GED. J Popul Econ 19, 769–793 (2006). https://doi.org/10.1007/s00148-005-0037-8

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  • DOI: https://doi.org/10.1007/s00148-005-0037-8

Keywords

  • GED
  • Immigration
  • Sheepskin effects

JEL

  • J31
  • J61
  • I2