Changes across cohorts in wage returns to schooling and early work experiences
Since the early 1970s, the US labour market has undergone some dramatic changes. The wage premium for college graduates relative to high school graduates has increased from 30% to 55% (Valletta, forthcoming). Over the same period, the rate at which college students work while in school has risen steadily from 30% to 50% (Scott-Clayton 2012), causing college students to take longer to complete their degrees (Bound et al. 2012).
Do these facts present a bleak picture? The answer depends on whether in-school work is a productive use of time for college students. Previous studies (e.g. Stinebrickner and Stinebrickner 2003) have suggested that these increasing rates of in-school work may distract students from their studies, increasing their chances of dropping out of school and harming their later-life labour market prospects. And, to the extent that college students work while in school in part to cover their educational expenses, this may increase their time-to-degree and delay the start of their post-schooling work careers. Alternatively, in-school work may, in fact, represent a human capital investment by students that benefits, rather than harms, their careers. For example, working while in college may give a student a leg up in the labour market upon graduation because she already possesses basic skills for interacting in the workplace. In this light, increased time-to-degree may not be problematic if students use the time to accrue additional skills.
Ashworth, Jared; Hotz, V. Joseph; Maurel, Arnaud; and Ransom, Tyler, "Changes across cohorts in wage returns to schooling and early work experiences" (2018). Pepperdine University, Graziadio Working Paper Series. Paper 24.