Beyond Educational Attainment

For decades, economists have investigated the private returns to human capital by examining the effects of educational attainment on earnings. However, given the wide range of knowledge and skills that are important to job performance, the number of years of formal education provides a rather simplistic view of human capital. Study findings show that, although educational attainment has a substantial positive effect on the earnings of U.S. workers, the types of knowledge required in an occupation play an equally important role in wage determination. Knowing a lot about subjects such as medicine and dentistry, administration/personnel, law and government, sales and marketing, and computers and electronics leads to a sizable positive effect on earnings. Knowledge that is obtained through on-the-job experience appears to be especially well-rewarded in the U.S. labor market.