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People with PH.D.s Earn 10 Times More Than Those With High-School Diplomas

By on April 7, 2016

Different studies show that people with higher levels of education earn more and have lower unemployment rates. Recently, Julio César Hernández, assistant professor at Universidad del Turabo’s School of Business & Entrepreneurship, analyzed “the effect of academic degrees on wages in Puerto Rico,” for the Department of Labor & Human Resources’ Tendencias magazine, and he concluded that on average, a person with a Ph.D. earns 10 times more throughout his/her lifetime than a person with a high-school diploma.

Just going from a high-school diploma to an associate degree means an increase of $300,000 over a person’s lifetime, which represents a 125% increase. People with professional degrees (such as doctors, lawyers, etc.) or Ph.D.s are in the highest wage levels.Graduandos

Having higher education not only allows people to obtain higher incomes, but also reduces their unemployment rate. For example, people who completed a college degree are half as likely to be unemployed than those who did not finish college.

Wage differences by educational levels are even greater when comparing Puerto Rico with the U.S. The wage differential of a person with a high-school diploma is 500% higher in the U.S. than in Puerto Rico, while the pay gap is 200% for those with associate degrees and bachelor’s degrees. The gap narrows as education levels increase. For master’s and professional degrees, the lifetime wage difference is 100% between the U.S. and Puerto Rico. “This may have implications for public policy seeking to reduce outmigration, since migration is expected to be less profitable to the extent that there are smaller salary differentials,” Hernández said.

The analysis shows that it is more profitable for Puerto Ricans to improve their educational levels than those living in the U.S. The increase in wages received with each degree obtained is relatively larger in Puerto Rico than in the U.S. While in the U.S. a person who goes from a high-school diploma to an associate degree can increase his/her salary by 32% throughout their lifetime, in Puerto Rico, this increase is 125%. Another difference is that people with Ph.D.s are in the highest wage level in Puerto Rico, while in the U.S., those with professional degrees occupy higher salary scales.

The increase in lifetime work wages is also studied by gender and race. Women obtained the highest increase in wages when they obtain a master’s or Ph.D. degree, but they earn less than men at all education levels, except when they only have a high-school diploma. In that case, women earn more.

Men with associate degrees earn 73% more than women at the same educational level. The gender pay gap is 53% for bachelor’s degrees and 55% for master’s degrees. Women with professional degrees will obtain lifetime salaries that are 31% less than those of men with the same education level. Women with Ph.D.s will receive salaries that are 24% less than those of men. Hernández explained that these differences “do not necessarily respond to factors associated with employment discrimination” and could be associated with factors such as specialization by gender, time of entry and length of stay in the labor market associated with births and caring for relatives—although the fact that these tasks fall exclusively on women’s shoulders could be viewed as discriminatory.

Race also affects wage levels. For example, black men receive salaries that are 31% lower than whites with the same level of education, associate degrees.

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