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Heterogeneity in Labor Market Returns to Master’s Degrees: Evidence from Ohio

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Graduate education is among the fastest growing segments of the U.S. higher educational system. This paper estimates the returns to Master’s degrees and examines heterogeneity in the returns by field area, student demographics and initial labor market conditions. We use rich administrative data from Ohio and an individual fixed effects model that compares students’ earnings trajectories before and after earning a Master’s degree. Findings show that obtaining a Master’s degree increased quarterly earnings by about 14% on average, but the returns vary largely across graduate fields. We also find gender and racial disparities in the returns, with higher average returns for women than for men, and for White than for Black graduates. In addition, by comparing returns among students who graduated before and under the Great Recession, we show that economic downturns appear to reduce but not eliminate the positive returns to Master’s degrees. There are important variations in the returns to Master’s degrees during the recession across field area and race/ethnicity.

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The data used in this study are not publicly available due to restrictions imposed by the data agreement.


  1. The following acknowledgement is required to be stated on any materials produced using workforce or higher education data accessed from the OLDA: This workforce solution was funded by a grant awarded to the U.S. Department of Labor’s Employment and Training Administration. The solution was created by the Center for Human Resource Research on behalf of the Ohio Department of Job and Family Services and does not necessarily reflect the official position of the U.S. Department of Labor. The Department of Labor makes no guarantees, warranties, or assurances of any kind, express or implied, with respect to such information, including any formation on linked sites and including, but not limited to, accuracy of the information or its completeness, timeliness, usefulness, adequacy, continued availability, or ownership. This solution is copyrighted by the institution that created it. Internal use, by an organization and/or personal use by an individual for non-commercial purposes, is permissible. All other uses require the prior authorization of the copyright owner.

  2. We cannot capture Bachelor’s degree completion for everyone, since some may have earned it prior to our data window, or may have done so at an out-of-state or private institution not covered in our data. All individuals in our sample adhere to this exclusion restriction. Earnings above the minimum wage are approximated using information from U.S. Department of Labor, State Minimum Wage Rate for Ohio [STTMINWGOH], retrieved from FRED, Federal Reserve Bank of St. Louis: The minimum wages are converted to 2019Q4 dollars using the Consumer Price Index for All Urban Consumers, U.S. City Average (CPI-U), in the same way as the earnings data. 17.3% of master’s degree holders (6288 individuals) were excluded from our sample because they lacked four quarters of earnings exceeding the minimum wage before enrolling in graduate school.

  3. The racial distribution of our sample corresponds to Ohio’s overall demographics—approximately 76% of the state’s population are White based on census estimates in 2019.

  4. Our main results remain consistent up to two decimal points for most variables when these two dummies are excluded. These results will be made available per request.

  5. Our main results remain the same to the second decimal place when excluding demographics and field area, both interacted with time, and the quarter-specific unemployment rate. These results will be made available upon request.

  6. The National Bureau of Economic Research (NBER) defines a recession as “a period of falling economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales,” and estimates that the Great Recession began in December 2007 and ended in June 2009. Since our study focuses on labor market outcomes, and unemployment rates continued to increase through the end of 2009, we include all of 2009 in the recession. Table 1 compares summary statistics between students who graduated with a Master’s degree before and under the Great Recession in the recession comparison sample. There is no significant difference in student compositions across the two cohorts.

  7. Top majors (CIP codes) within each field area are listed in Appendix Table 1.

  8. Our estimate for Master’s degrees in education closely mirrors Ohio’s minimum salary schedule for teachers with 2 years of experience and a BA degree, indicating a consistent salary increase for those who complete a master’s degree.

  9. Note that our only interest here is to examine heterogeneity in returns to credentials depending on initial labor market conditions. We are neither estimating the effect of the Great Recession on earnings per se, nor can we examine how returns to Master’s degrees may change after the recession. Furthermore, we note that we cannot causally identify whether the estimated heterogeneity in returns is directly due to the difference in labor market conditions or whether it may reflect heterogeneity in returns along other dimensions (e.g., field areas, gender).

  10. It’s important to note that Fig. 1 displays unadjusted earnings data, not our regression estimates. While the initial 2 years post-graduation show less dramatic differences in raw earnings, only two quarters during this period exhibit higher earnings for the recession cohorts, whereas quarters 10–24 post-graduation show significantly lower earnings. Our regression models account for these nuances by including controls for the unemployment rate in each quarter, which helps mitigate the temporary impact of economic conditions. The pre-recession cohorts experience tougher economic conditions in the later post-graduation quarters, potentially explaining why the apparent shift seen in the raw data is attenuated in the regression estimates.

  11. Calculated by authors using NCES PowerStats among borrowers who enrolled in and completed a Master’s degree in 2007–2008 at a public institution in Ohio.

  12. Given our study’s approach of organizing majors into broader degree fields and Altonji and Zhu’s (2021) focus on specific majors, direct comparisons are challenging. For instance, while we grouped multiple Engineering majors for adequate sample sizes, Altonji and Zhu examined Computer Engineering, Mechanical Engineering, and Electrical Engineering separately, lacking findings for the broader Engineering degree field. This discrepancy made a direct comparison between our studies challenging. To address this discrepancy, we selected comparable results between our study and theirs, considering majors they reported that constitute a significant portion of the degree fields we cover. Specifically, our estimate for a Master’s degree in Engineering is 0.125, among which 22% are in Mechanical Engineering; and Altonji and Zhu’s individual fixed effects estimate for a graduate degree in Mechanical Engineering is 0.125. We estimate that a Master’s degree in Health, mostly in Nursing, has a return of 0.329; and their estimate for a degree in Nursing is 0.26. Also, our estimate for a degree in Social and Behavioral Sciences, represented largely by Social Work, is 0.099; and their estimate for a degree in Social Work is 0.097. While Altonji and Zhu show that an MBA degree has a return of 0.194, our estimate for a Master’s degree in Business, among which 66% are in Business Administration and Management, is only 0.089. A Master’s degree in Education has a return estimated at 0.146 in our study, represented by 24% in Curriculum and Instruction and 15% in Education Administration and Leadership, but is low for both majors in Altonji and Zhu’s results (0.033 for a degree in Education Administration, and −0.005 for a degree in Curriculum and Instruction).

  13. In Ohio, the minimum teacher salary increases with the highest degree level of the teacher. In Texas, the minimum salary only depends on years of experience, and teachers with an advanced degree may be compensated with a stipend by districts.


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Correspondence to Veronica Minaya.

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Minaya, V., Scott-Clayton, J. & Zhou, R.Y. Heterogeneity in Labor Market Returns to Master’s Degrees: Evidence from Ohio. Res High Educ (2024).

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