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COHORT EFFECTS

One advantage of the SIPP data, compared to other data sets that have been used to examine the returns to sub-baccalaureate education, is that they include all age groups. It is therefore possible to examine returns for various cohorts. There are several reasons to be interested in differences among cohorts. One is simply to compare the results in Table 3, for all those 25-64, with the results for a younger cohort, which are comparable to those available in other data sets (such as NLS72 and NLS-Youth). Another is that the amount of postsecondary education--particularly of sub-baccalaureate education--has changed over cohorts and, therefore, its economic return may have changed as well. Table 13 provides the most relevant information on postsecondary education for four cohorts, based on 1987 data. Over time, baccalaureate degrees, Associate degrees, and the accumulation of some college but without a credential have all increased, particularly for women, as their college-going rates have gone up. Only for vocational certificates is there no increase. If increasing rates of postsecondary education over cohorts have been led by increased demand for educated workers, then we would expect to see the returns to postsecondary education higher for younger cohorts.[33] If, on the other hand, increases in postsecondary education have been supply-driven rather than demand-driven--for example, caused by the lower costs and greater accessibility of college, in turn, due to the expansion of higher education during the 1960s, the growth of accessible community colleges, and the expansion of student aid--then returns to postsecondary education may be lower for younger cohorts.

Tables 14 and 15 present the coefficients of schooling variables for men and women in these four cohorts for 1987 data only. For men, the returns to baccalaureate degrees are quite similar across the four cohorts. However, the effects of Associate degrees are higher for younger cohorts, consistent with the finding (in Table 13) that increasing demand (rather than supply) is responsible for the increase in Associate degrees. The effects of vocational certificates are erratic and never statistically significant (probably because of small sample sizes). Once again, while the average effect of certificates may be positive (from 1984 and 1987 results in Table 3), there is a great deal of variation around this average--though such variation is difficult to establish because of sample sizes.

Table 13

Proportion with Postsecondary Education, for Four Cohorts: 1987

Cohorts
25-3435-4445-5455-64
Males
B.A./B.S.19.4%19.1%13.2%14.0%
Associate6.66.63.62.7
Certificate2.01.81.22.2
Some college,
no credential		19.217.915.512.1
Females
B.A./B.S.19.516.212.08.7
Associate7.67.23.21.7
Certificate2.84.13.53.5
Some college,
no credential		19.817.015.211.3

Table 14

Effects of Education on Annual Earnings for
Four Age Cohorts: Males, 1987

Age 25-34Age 35-44Age 45-54Age 55-64
B.A./B.S..375*
(.046)		.377*
(.051)		.424*
(.075)		.430*
(.105)
Associate.266*
(.062)		.150*
(.070)		.144
(.120)		.080
(.198)
Vocational Certificate.015
(.103)		.144
(.122)		.366
(.202)		.134
(.215)
Some college,
no credential:
4 years.294*
(.127)		.444*
(.150)		.359
(.272)		 -2.02
(.508)
3 years.165
(.094)		.374*
(.114)		.466*
(.173)		 -.087
(.247)
2 years.112
(.069)		.113
(.075)		.243*
(.099)		.004
(.152)
1 year.137*
(.063)		.085
(.073)		.256*
(.104)		.189
(.178)
< 1 year.067
(.075)		.002
(.017)		.192
(.153)		-.219
(.261)
9-11 years -.247*
(.059)		 -.412*
(.065*)		-.304*
(.076)		-.154
(.099)
< 8 years -.313*
(.095)		 -.393*
(.082)<		 -.441*
(.088)		 -.088
(.109)
N189116571085767
R2.388.402.411.480
*Significant at 5%, conventional 2-tailed t-test. Standard errors are in parentheses.

Table 15

Effects of Education on Annual Earnings for
Four Age Cohorts: Females, 1987

Age 25-34 Age 35-44 Age 45-54 Age 55-64 
Ph.D..588
(.482)		.859*
(.311)		1.13*
(.421)		.364
(.968)
Professional degree1.37*
(.245)		1.40*
(.294)		-.177
(.320)		.659
(.492)
Masters.660*
(.120)		.525*
(.105)		.766*
(.137)		.540*
(.233)
B.A./B.S..385*
(.070)		.240*
(.078)		.190*
(.098)		.175
(.154)
Associate.293*
(.091)		.158
(.100)		.031
(.157)		.081
(.315)
Vocational certificate.277
(.138)		.056
(.125)		.280
(.154)		.237
(.224)
Some college:
4 years.050
(.247)		-.236
(.342)		.092
(.431)		-.486
(1.21)
3 years.357*
(.153)		.262
(.189)		-.199
(.184)		.408
(.328)
2 years.072
(.105)		-.026
(.114)		.126
(.156)		.226
(.233)
1 year.027
(.089)		.164
(.108)		.097
(.114)		-.078
(.190)
< 1 year-.052
(.127)		.027
(.137)		.280
(.183)		.140
(.365)
9-11 years-.288*
(.103)		-.163
(.105)		-.289*
(.097)		-.061
(.125)
< 8 years-.209*
(.177)		-.218
(.167)		-.307*
(.123)		-.059
(.153)
R2.365.398.424.447
N 1866 1464 970 598
*Significant at 5%, conventional 2-tailed t-test. Standard errors are in parentheses.

The effects of some college without credentials are similarly erratic. One interpretation, however, is that the benefits of moderate college coursework (one to two years) do not materialize until middle age (age 45-54), and this is certainly true for less than one year of coursework. More substantial amounts of coursework, three to four years, are more likely to benefit younger workers. Finally, for older workers in the 55-64 age group, formal schooling below the baccalaureate level seems to make little difference in earnings.

For women, the patterns are quite different. The results for professional, baccalaureate, and Associate degrees all reveal larger returns for younger cohorts--consistent with the hypothesis that the demand for educated workers has grown over time.[34] The benefits to vocational certificates are somewhat erratic and insignificant--perhaps because of small sample sizes (as Table 13 indicates). The coefficients for those with some college but without a credential are quite consistently insignificant, as they were in Table 3; evidently women entering postsecondary education, but failing to complete a credential, have never enjoyed economic benefits as a result.

It is unwise to make too much of the results for different age groups because of small sample sizes, insignificant coefficients, and erratic results. However, for some credentials--particularly Associate degrees among men, and baccalaureate and Associate degrees among women--there appear to be higher returns to schooling for younger cohorts. Such findings are consistent with higher demand for educated workers driving up both economic returns and the numbers of completers. However, these patterns do not hold for college coursework among noncompleters, since there are very few and uncertain benefits for women, and any benefits among men appear not to materialize until middle age.

[33] There is a signaling argument which comes to the same conclusion. If, for example, Associate degrees are relatively rare--as they are in the 45-54 and 55-64 cohorts--then employers may not know what capacities they signal and may not reward them with higher earnings. As a credential becomes more common and better known, then it may become better accepted by employers, and its economic value will increase. This kind of signaling scenario is consistent with community colleges claiming that they have to "sell" or explain their credentials to the employer community.

[34] The results for those with Ph.D.s are erratic because of small sample sizes, and the patterns for professional degrees among women are also erratic for older groups.

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