How the gender pay gap affects the earnings premium of college degrees
The share of women among the college-educated population has increased over time, from 45 percent in 1991 to 52 percent in 2017. But if women were paid as much as men with similar levels of education, the overall earnings premium for college degrees would have grown even more than it has.
According to census data, in 2017, average earnings for women with a bachelor’s degree or higher were $60,700, or 2.30 times the earnings of women with just a high school diploma. Average earnings for men with a bachelor’s degree or higher were $97,400, or 2.19 times the earnings of men with just a high school diploma. Overall average earnings for men and women with a bachelor’s degree or higher were $78,400, or 2.20 times the earnings of adults with just a high school diploma.
Between 1991 and 2017, the difference between average earnings for adults with a bachelor’s degree or higher and adults with only a high school diploma rose by 24 percent ($8,300 in 2017 dollars). The average earnings premium for men increased by 30 percent ($12,300), and the premium for women increased by 48 percent ($11,200).
Taken together, this means that because women make up a growing share of the college-educated population but are still paid less than men for similar work, the overall earnings premium of a college degree has been suppressed.
Shifts in educational attainment
As educational attainment among women has increased, the share of adults with only a high school diploma who are male rose from 46 percent in 1991, to 49 percent in 2004, and to 51 percent in 2017. At the same time, the share of males among those with at least a bachelor’s degree fell from 55 percent to 51 percent to 48 percent.
The changing gender composition of high school graduates would have caused average earnings among this group to increase even if salaries had not increased over time because the men in the group have consistently earned more than the women over the entire 1991 to 2017 period.
The opposite has happened with college graduates. The increase in the share of female college graduates has caused the average earnings of those with a bachelor’s degree or higher to increase less than would have otherwise been the case.
If women earned as much as men with the same level of education, the gap between the earnings of high school graduates and college graduates would have increased even more than it did. Instead, the increasing share of male high school graduates pulled that group’s average up, and the increase in the share of female four-year college graduates pushed the group’s average earnings down.
The effect of the gender earnings gap
Another way to see the effect of the gender earnings gap is to compare the path of the actual earnings difference between high school graduates and those with a bachelor’s degree or higher with what the difference would have been if the gender balance had not changed.
The average earnings of high school graduates increased by 11 percent, from $32,100 (in 2017 dollars) in 1991 to $35,700 in 2017. If the 46 to 54 percent male to female breakdown in 1991 had persisted, with the average earnings for both genders following their actual paths, average earnings among high school graduates in 2017 would have been only $34,600—an increase of 8 percent.
The average earnings of adults with a bachelor’s degree or higher increased by 18 percent from $66,500 (in 2017 dollars) in 1991 to $78,400 in 2017. If the gender balance in this group had not tilted toward women, average earnings among college graduates would have increased to $80,700—a 21 percent increase.
The average earnings premium for adults who have earned at least a bachelor’s degree relative to those with only a high school diploma has grown over time. But because women are paid less than men with similar levels of education, it’s difficult to see the growing contribution of higher education to economic well-being.
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