College Premium and Its Impact on Racial and Gender Differentials in Earnings and Future Retirement Income

Damir Cosic

Workers with college education earn substantial premium in wages, but this premium varies across race and gender. This study explores variations in college premium by race and gender in earnings and in their cumulative effects on retirement income. It uses dynamic microsimulation techniques to estimate returns to education in earnings and retirement income by race and gender, as well as losses/gains due to disparities in college premium. The results show that, of the four demographic groups whose earnings and retirement income were estimated, the college premium for the median earner is the highest for white women and the lowest for black men, with black women and white men having similar values of college premium. Returns to college education converge at the median of retirement income. Without race and gender disparities in wage, the median college educated earner among black women and men would earn 23 percent more.

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 Presented in Session 9. Marriage, Family, Households, & Unions; Gender, Race, & Ethnicity