Institute researchers have discovered that the earnings boost from college is less if you grew up poor. This post explores how this disadvantage varies with age and race.
In ongoing work, Institute researchers Tim Bartik and Brad Hershbein have recently discovered that the increase in lifetime earnings from having a bachelor’s degree, relative to having just a high school diploma, is much smaller for people who grew up poor than it is for people who grew up wealthier. This is a new and surprising finding that has not been uncovered by any previous research, in part because until recently researchers have not had adequate data on both family background and earnings over an entire career.
Using the Panel Study of Income Dynamics (PSID), a survey that has tracked the same families and their descendants since the late 1960s, the researchers compare career earnings for people who achieved different levels of education by age 25, and whose parents had incomes above and below 185 percent of the federal poverty level (FPL)—the eligibility threshold for the federal assisted lunch program. Because the survey follows individuals for so long, one can observe survey respondents from the time they are in high school—when family income is measured—nearly through retirement ages.