Education and Lifetime Earnings: An Estimate Using Administrative Earnings Data Matched with the Survey of Income and Program Participation

ChangHwan Kim, University of Kansas
Christopher R. Tamborini, U.S. Social Security Administration (SSA)
Arthur Sakamoto, Texas A&M University

There is widespread research and policy interest in differences in lifetime earnings by education. In this paper, we seek to evaluate the long-term effects of education on earnings over different stages of the work-life using a rich data set that matches respondents in wave 2 of the Survey of Income and Program Participation to their longitudinal earnings records in the Social Security Administration. The results show that the returns to higher education compared to high school education is about $783,000 for men and $611,000 for women during 50 year lifetime work careers after accounting for race, marital history, the number of child births, place of birth, and courses taken in high school. Higher education is associated with greater returns at the later stages of work-life, even in the 60s. This has potential implications for retirement timing and income security. The implications of these findings are discussed.