Do Returns to Human Capital Equalize Across Occupational Paths?

This study estimates earnings function parameters across alternative occupational paths, with an emphasis on identifying rates of return to post-school human capital investment. Based on cross-sectional and synthetic cohort analysis using the 1973-2000 Current Population Surveys, estimates are obtained for men and women on the returns to schooling and the investment intensity, length, and returns from postschool training. Although the shapes of wage-experience profiles differ substantially across occupations and skill groups, evidence supports the theoretical prediction that rates of return are equivalent across alternative investment paths. Little evidence is found for an increase in returns to post-school training over time. By the 1990s, returns to schooling had risen to a level similar to the returns from post-school training. The authors appreciate helpful suggestions from Solomon Polachek and an anonymous referee. The CPS database used in this research was developed jointly with David Macpherson of Florida State University.