Article thumbnail

Why is the Rate of Return to Schooling Higher For Women Than For Men?

By C Dougherty


The rate of return to schooling appears to be nearly two percentage points greater for females than for males in the National Longitudinal Survey of Youth data set, despite the fact that females tend to earn less, both absolutely and controlling for personal characteristics. A survey of previous studies reporting wage equations reveals that a higher return to female schooling appears to be the norm, although it has not attracted comment. This paper considers various explanations. The most important involves the detrimental impact of discrimination and other factors that cause women to accept wage offers that undervalue their characteristics. It is hypothesized that the better educated is a woman, the more able and willing she is to overcome the se handicaps and compete with men in the labour market, and an index of discrimination disaggregated by years of schooling is constructed using Oaxaca decompositions. This index is indeed negatively correlated with schooling and it accounts for about one half of the differential in the male and female schooling coefficients. Next considered is the possibility that part of the differential could be attributable to male-female differences in the quality of educational attainment, as proxied by their academic outcomes in high school. The NLSY females did indeed perform better than the males, but there is little association between academic attainment and Earnings and allowing for it made no difference to the estimate of the differential in the returns to schooling. The third explanation considered is that women choose to work in sectors where education is relatively highly valued. Controlling for this effect does indeed account for much of the remaining differential.returns to education, wage equations

OAI identifier:

Suggested articles


  1. (1986). Analysis of Panel Data, Cambridge:
  2. (1995). Changes in College Skills and the Rise in the College Wage Premium’,
  3. (1993). Changes in the Male/Female Wage Gap, 1976–1985’,
  4. (1995). Does School Quality Matter? Evidence from the National Longitudinal Survey of Youth’,
  5. (2001). Econometric Analysis of Panel Data (second edition),
  6. (1978). Economic Rationale for Sex Differences in Education’,
  7. (1990). Effects of Cohort Size on Postsecondary Training’,
  8. (1974). Empirical Evidence on the Functional Form of the Earnings-Schooling Relationship’,
  9. (1988). Employers’ Discriminatory Behavior and the Estimation of Wage Discrimination’,
  10. (1974). Family Investments in Human Capital: Earnings of Women’,
  11. (1990). Gender Differences in Current and Starting Salaries: the R ole of Performance,
  12. (2000). Gender Differences in Pay’,
  13. (1981). Gender, College Major, and Earnings’,
  14. (1999). Identification in Detailed Wage Decompositions’,
  15. (1973). Income Differences between Men and Career Women’,
  16. (1977). Is Occupational Segregation the Cause of the Flatter ExperienceEarnings Profiles of Women?’,
  17. (1996). Is there a Link between School Inputs and Earnings? Fresh Scrutiny of an Old Literature’,
  18. (1984). Job Preferences, College Major, and the Gender Gap in Earnings’,
  19. (1983). Labor market Discrimination against hispanic and black Men,
  20. (1995). Labor-Market Returns to Two- and Four-Year College’,
  21. (1991). Male-Female Differences in Hourly Wages: the Role of Human Capital, Working Conditions, and Housework’,
  22. (1989). Male-Female Wage Differentials and Policy Responses’,
  23. (1973). Male-Female Wage Differentials in Urban Labor
  24. (1976). Nonlinear Earnings Functions, Age, and Experience: a Nondogmatic Reply and Some Additional Evidence’,
  25. (1983). On Decomposing the Wage Gap: a Critical Comment on Blinder’s Method’,
  26. (1994). On Discrimination and the Decomposition of Wage Differentials’,
  27. (1988). On the Decomposition of Wage Differentials’,
  28. (1999). Race and Gender in the Labor Market’,
  29. (1992). Race and Gender Pay Differentials’,
  30. (1979). Returns to College Education: an Investigation of Self-Selection Bias Based on the Project Talent Data’,
  31. (2002). Returns to Investment in Education: a Further Update’, World Bank Policy Research Working Paper 2881,
  32. (1980). Sample Selection Bias as a Specification Error with an Application to the Estimation of Labor Supply Functions’,
  33. (1975). Sex and the Process of Status Attainment:
  34. (1971). Sex Differences in Compensation’,
  35. (1981). Sex Stratification in the Workplace: Male-Female Differences in Economic Returns to Occupation’,
  36. (1997). Sex-Based Differences in School Content and the Male-Female Wage Gap’,
  37. (1997). Swimming Upstream: Trends in the Gender Wage Differential in the 1980s’,
  38. (1999). The Causal Effect of Education on Earnings’,
  39. (1976). The Common Structure of Statistical Models of Truncation, Sample Selection and Limited Dependent Variables, and a Simple Estimator for Such Models’,
  40. (1993). The Demand for and Return to Education when Education Outcomes are Uncertain’,
  41. (1986). The Economic Analysis of Labor Market Discrimination: a Survey’,
  42. (1984). The Economic Value of Academic and Vocational Training Acquired in High School’,
  43. (1979). The Economics of Sex Differentials,
  44. (1995). The Effects of High School Curriculum on Education and Labor Market Outcomes’,
  45. (1997). The Gender Earnings Gap among College-Educated Workers’,
  46. (1995). The Growing Importance of Cognitive Skills in Wage Determination’,
  47. (1985). The Persistence of Pay Differentials: the Economics of Sex Discrimination’,
  48. (1991). The Specification of Earnings Functions: Tests and Implications’,
  49. (1978). The Theory of Human Capital and the Earnings of Women: a Re-examination of the Evidence’,
  50. (1973). Wage Discrimination: Reduced Form and Structural Estimates’,
  51. (1993). Why the Gender Gap in Wages Narrowed in the 1980s’,
  52. (1978). Work Experience, Work Interruption, and Wages’,
  53. (1979). Work History, Labor Force Attachment, and Earnings Differences between the Races and Sexes,

To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.