ESRI Discussion Paper Series No.336
The Returns to Postgraduate Education

Fumihiko Suga
Visiting Fellow, Economic and Social Research Institute, Cabinet Office, Japan
Assistant Professor, Graduate School of Economics, Kyushu University, Japan

Abstract

This paper aims to estimate the returns to postgraduate education in Japan, taking potential self-selection bias due to the absence of information on academic ability and the business cycle into consideration. The effect of earning a master's degree on wages is estimated using Japanese Panel Survey of Consumers (JPSC) data that contains extensive information on individuals' undergraduate subjects and type of university (private or public). The estimates using ordinary least squares (OLS) and Heckman two-step estimation respectively indicate that postgraduate wage premiums in Japan are 25.0% and 26.4% for men and 23.7% and 24.7% for women. The estimation results suggest that workers’ undergraduate subject and type of university (private or public) explain only a small fraction of the postgraduate wage premium. Moreover, in order to account for the self-selection bias, graduate enrollment capacity is employed as an instrumental variable (IV). In the IV regressions, the estimated postgraduate wage premium is not statistically significant. The estimates are not significant even in the regression using Working Person Survey (WPS) data, which has a much larger sample size than the JPSC. Although IV regressions of log wage do not provide positive and statistically significant results, the estimated effect of postgraduate education for male workers on job satisfaction is positive and statistically significant. It indicates that Japanese males obtain a master’s degree not for higher wage, but for non-pecuniary benefits.


Structure of the whole text(PDF-Format 1 File)

  1. Full TextI will open in a new window(PDF-Format 1.28 MB)
  2. 1ページ
    Abstract
  3. 2ページ
    1. Introduction
  4. 6ページ
    2. Background and Related Literature
  5. 11ページ
    3. Data
    1. 11ページ
      3.1. Japanese Panel Study of Consumer
    2. 13ページ
      3.2. Working Person Survey
    3. 14ページ
      3.4. Other Datasets
  6. 14ページ
    4. Estimation Method
  7. 16ページ
    5. Estimation Results
    1. 16ページ
      Estimation Results of Wage Regressions
    2. 18ページ
      Estimation Results of Job Satisfaction Regressions
  8. 19ページ
    6. Conclusion
    1. 21ページ
      References
    2. 23ページ
      Figure 1: Graduate enrollment by undergraduate major and school type Data source: Basic Survey of Schools
    3. 23ページ
      Figure 2: Growth rate of graduate enrollment by undergraduate major and school type Data source: Basic Survey of Schools
    4. 24ページ
      Table 1: Summary statistics (JPSC)
    5. 24ページ
      Table 2: Number of observations by undergraduate major and school type (public/private)
    6. 24ページ
      Table 3: Summary Statistics (WPS)
    7. 24ページ
      Table 4: Number of observations by undergraduate major and school type (public/private) (WPS)
    8. 25ページ
      Table 5: OLS estimation results (JPSC)
    9. 26ページ
      Table 6: Heckman two-step estimation results (JPSC)
    10. 27ページ
      Table 7: The effect of graduate school capacity on master’s dummy (JPSC)
    11. 28ページ
      Table 8: IV estimation results (JPSC)
    12. 29ページ
      Table 9: OLS estimation results (WPS)
    13. 30ページ
      Table 10: The effect of graduate school capacity on master’s dummy (WPS)
    14. 31ページ
      Table 11: IV estimation results of log wage regression (WPS)
    15. 31ページ
      Table 12: IV estimation results of job satisfaction regression (WPS)
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