Education Premium

The education premium refers to the empirical fact that, all else equal, earnings increase with the amount of schooling. For example, in the United States in 2012, using median weekly earnings data from the Bureau of Labor Statistics, individuals with a bachelor’s degree had median weekly earnings of $1,066, while the median weekly earnings of those with a high school diploma was $652, and the median weekly earnings of individuals with less than a high school diploma was $471.

Data from the Organisation of Economic Co-operation and Development (OECD) on the relative earnings of adults ages 25 to 64 in 2011 for individuals with a tertiary-type A or advanced-research-programs education (bachelor’s degree or beyond) as compared to individuals with an upper-secondary or postsecondary nontertiary education (high ...