Effects of College Graduation on Individual Income
Report to the Ohio Faculty Council on the Effects of College Graduation on Individual Income: A Summary of Research Results in the Sociological Literature
Submitted by:
Rudy Fenwick
Department of Sociology, and
Chair of Faculty Senate
The University of Akron
Akron, OH 44325-1905
fenwick@uakron.edu
February 10, 2005
Below are the basic issues and general research results regarding the effects of college graduation on individual income (earnings) drawn from a review of sociological literature.
1. There is a substantial and growing gap between the incomes of college graduates and those of high school graduates. According to the U.S. Bureau of Census, college graduates earned 48% more income than high school graduates in 1979. In 2000 college graduates earned 100% more than high school graduates.
2. It is the college degree itself, rather than attending college, that accounts for most of the gap. According to the Bureau of Census, the 20 highest paying occupations in 2000 required a college degree.
3. The most important factors accounting for the growing income gap are:
(1) The change from an industrial to a service economy, which has led to the growth of both low-skill, low income jobs and high-skill, high income jobs. The jobs that have disappeared are the low-skill, high income jobs (typically skilled blue collar occupations);
(2) Technological changes that require more intellectual skills rather than physical skills;
(3) And, the upgrading of credentialing requirements for existing jobs.
4. The effect of education, including college graduation, on income is primarily indirect through occupational attainment. Education is more predictive of occupational attainment than of income. This is because there are substantial "within occupation" income differences due to employer characteristics, such as industry and size of firm, and employee differences in seniority/experience and authority positions within organizations. Gender, race, and ethnicity also account for substantial "within occupation" differences in incomes.
5. Factors that predict college graduation are somewhat different than those that predict going to college.
(1) Who goes to college is predicted by a combination of students' career and educational aspirations, cognitive abilities, and their families' socioeconomic statuses, or SES (the educational, occupational, and income levels of their parents, especially fathers). Socioeconomic status is the most important of these factors. It determines the quality of K-12 schooling of the student and the ability to afford college. It also predicts both aspirations and cognitive abilities. The combination of family SES and student's cognitive ability accounts for an 82% difference in the likelihood of attending college. Ninety-one percent of students with both high cognitive abilities and high family SES attend college; only 9% of those with low cognitive abilities and low family SES attend.
(2) The best predictor of college graduation is college GPA. In turn, college GPA is best predicted (although weakly) by high school GPA and college entrance exam scores.
(3) Family SES is only very weakly predictive of graduation. The most likely explanation for this is the status homogeneity of college students. They are more likely to be from middle and upper SES families and much less likely to be from lower SES than the overall population of K-12 students.
6. The type of college from which students graduate (private versus public; large universities versus small liberal arts colleges) has no significant effect on either their occupational or income attainment.