Tuesday’s blog post examined various relationships among high school characteristics, school type and wages. However, this surface analysis did not control for several other factors that can influence wages as well. Today’s post shows the results after accounting for such factors and is again based on work from Assistant Vice President and Economist Michael Owyang and former Senior Research Associate E. Katarina Vermann, both with the Federal Reserve Bank of St. Louis.
As covered in Tuesday’s post, a simple analysis of data from the National Education Longitudinal Study of the effect of school choice on future earnings showed that:
Controlling for other factors such as race, sex and socioeconomic status as well as industry of employment and occupation yielded different results. Owyang and Vermann found that private high school graduates earned just 2.6 percent more than their public school counterparts, and the results were not statistically significant. Catholic high school graduates, on the other hand, earned a statistically significant 13.6 percent wage premium over public high school graduates. The authors noted, “This result could indicate that there are significant differences in unquantifiable aspects of school quality that could affect earnings later in life.”
Owyang and Vermann also found that most of the other factors originally studied—school geography (rural, urban, etc.), dropout rates and percentage of students in remedial courses—were not significantly related to wages. Graduates of schools with higher base salaries for teachers, however, experienced a 2.3 percent increase in earnings. The authors wrote, “Thus, investing in high-quality teachers appears to have an economic return for students regardless of school type.”
The authors noted that their results suggest that the type of school one attends does not always translate directly to a change in future wages. However, there could also be indirect effects.
Owyang and Vermann estimated the relationship among high school type, college enrollment and completion of a four-year college and found that:
Owyang and Vermann concluded by noting that while there appear to be long-run economic benefits from attending parochial or private high schools, these results didn’t come from a random sample. Students at these schools may have traits that contribute to their academic and economic achievement, meaning they may be students who are more likely to succeed regardless of where they were educated.
The authors wrote, “As a result, the returns to the type of high school a student attends may be a better indicator of a student’s ability or family finances rather than the school’s effect. This issue provides evidence for the match-quality measure of school type, assuming individuals who choose the school in which they enroll are selecting the school based on unquantifiable aspects of fit, such as values. As a parent, what matters may be simply focusing on a child’s education regardless of the school a child attends.”
On the Economy
Get notified when new content is available on our On the Economy blog.
The On the Economy blog recently ranked in the top 20 on Feedspot’s list of top bank blogs.
About the Blog
The St. Louis Fed On the Economy blog features relevant commentary, analysis, research and data from our economists and other St. Louis Fed experts.
Views expressed are not necessarily those of the Federal Reserve Bank of St. Louis or of the Federal Reserve System.