Schooling as a Wage Depressant / Edward P. Lazear.

By:

Lazear, Edward P

Contributor(s):

National Bureau of Economic Research

Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w0092.Publication details: Cambridge, Mass. National Bureau of Economic Research 1975.Description: 1 online resource: illustrations (black and white)Online resources:

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Abstract: We investigate the relationship between current schooling and current wage rates. Casual observation seems to reflect a discontinuity in wage rate growth which occurs when an individual completes school and joins the labor force as a permanent member. This suggests that the time spent in work while attending school is in some sense secondary. Here, the marginal value of the individual's time is considerably lower than the average value of his time. The problem is essentially one of "anti-complementarities" between the production of human capital through formal schooling and working in the primary occupation. More generally, the productivity of an individual's time in one endeavor is not independent of how the rest of his time is spent. If this is the case, students will be willing to accept lower paying jobs which do not greatly diminish the productivity of school time in lieu of jobs offering higher wages at the cost of a greater reduction in school time productivity. The wages of students, other things constant, are about 12% lower than those of non-students. The magnitude of this wage differential is surprisingly large and warrants investigation on empirical grounds alone. This paper explores the empirical relationship and examines various explanations for it. Finally, implications of the analyses are discussed.

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Item type	Home library	Collection	Call number	Status	Date due	Barcode	Item holds
Working Paper	Biblioteca Digital	Colección NBER	nber w0092 (Browse shelf(Opens below))	Not For Loan

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June 1975.

We investigate the relationship between current schooling and current wage rates. Casual observation seems to reflect a discontinuity in wage rate growth which occurs when an individual completes school and joins the labor force as a permanent member. This suggests that the time spent in work while attending school is in some sense secondary. Here, the marginal value of the individual's time is considerably lower than the average value of his time. The problem is essentially one of "anti-complementarities" between the production of human capital through formal schooling and working in the primary occupation. More generally, the productivity of an individual's time in one endeavor is not independent of how the rest of his time is spent. If this is the case, students will be willing to accept lower paying jobs which do not greatly diminish the productivity of school time in lieu of jobs offering higher wages at the cost of a greater reduction in school time productivity. The wages of students, other things constant, are about 12% lower than those of non-students. The magnitude of this wage differential is surprisingly large and warrants investigation on empirical grounds alone. This paper explores the empirical relationship and examines various explanations for it. Finally, implications of the analyses are discussed.