College Premium and Its Impact on Racial and Gender Differentials in Earnings and Future Old-age Income

Working Paper

College Premium and Its Impact on Racial and Gender Differentials in Earnings and Future Old-age Income

April 5, 2019

Abstract

Returns to college education have been growing over the last several decades and are likely to continue growing in the future, but they are not the same for all, providing different incentives to invest in education. This study explores the role that race and gender play in the earnings of college-educated workers. It estimates returns to college in earnings and old-age income, projected in 2050, by race and gender. It also estimates the effects of race and gender wage discrimination on earnings and old-age income. Using microsimulation techniques, the study simulates a baseline and two counterfactual scenarios. It finds that white women receive the highest returns to college education in earnings, followed by black women. Race-based wage discrimination, which is substantial and persistent over individuals’ working lives, results in large lifetime earnings losses for black women and men.

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