Abstract:

A question often asked by many prospective students is whether it pays to pursue an advanced (Master’s, Professional, or Ph.D.) degree. In some cases, there is mixed evidence that getting an advanced degree may lead to earnings improvements among graduates. The issue is especially problematic, as, in some cases, evidence shows that pursuing a Ph.D. degree is “often a waste of time” (The Economist, 2016). Other research shows a bleak picture for master’s graduates, as for some occupations, work experience and/or other factors may lead to master’s degree holders median wages being below those of their bachelor’s counterparts.

Evidence was sought from the latest US data from the 2018 American Community Survey, which collects data from a 1% sample of the American population. The analysis has an exploratory nature, using median income data for graduates, controlling for earnings increases from getting work experience after completing a bachelor’s degree, gender, STEM orientation, and occupation, and seeks to answer the following research questions:

- Is there an actual earnings premium associated with pursuing advanced education?
- Do advanced education graduates working in STEM occupations enjoy a higher earnings premium than other graduates?
- In which occupations can holders of advanced degrees enjoy an earnings premium, and in which ones getting an advanced degree may not be financially rewarding?
- Can getting an advanced degree actually reduce the gender wage gap, and is working in STEM occupations the best way of achieving it?

Our analysis shows that while pursuing graduate studies leads to earnings increases in most cases, not everyone benefits by getting an advanced degree to the same extent. While the highest salaries are reached by men and STEM workers, it seems that the highest earnings premiums enjoyed by advanced degree holders over their bachelor’s counterparts are achieved by those working in non-STEM occupations, women, and holders of professional degrees. For a few occupations, pursuing an advanced degree does not lead to an increase in earnings, and the highest increases are for professional degree holders working in non-STEM occupations. These conclusions can inform prospective students, career counsellors, and policymakers, as to the opportunity of pursuing graduate education for individuals with different personal and professional circumstances, to suggest the best choices for pursuing graduate education or targeting policy measures aimed to reduce perceived disadvantages experienced by some of them.

Keywords:

Higher education, advanced degrees, STEM fields, gender, occupations.