Is The Wage Gap Between High School And College Graduates Widening? A Panel Analysis

Abstract

This study examines the wage growth of high school graduates and college graduates. The NLSY-79 data is employed. The data shows that college graduates earn a premium over high school graduates and the premium is widening over time.  A panel regression model was estimated for the years 1982 until 2004. The results show that education has a significant positive effect on wages and it is the primary determinant of the wage gap. Also, age and gender were found to have a significant effect on wages. Testing the impact of occupation, only managerial, clerical, and service jobs had a significant effect on wages.  Production jobs were statistically insignificant as suggested by the labor market polarization theory.