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College as an Investment: The Role of Graduation Rates in Changing Occupational Inequality by Ethnicity, Gender, and Race*

Daniel H. Krymkowski

Beth Mintz

University of Vermont

Running Head: College as an Investment

Word Count: 6556

*Corresponding author: Daniel H. Krymkowski, Department of Sociology, University of Vermont, 31 S. Prospect St. Burlington, VT 05405. dkrymkow@uvm.edu. The authors contributed equally to the paper.

What Does a College Degree Buy? The Role of Graduation Rates in Changing Occupational Inequality by Ethnicity, Gender, and Race

Abstract

In this paper, we examine whether investments in higher education have contributed to changes in occupational inequality by focusing on the impact of college completion rates on movement into desirable occupations between 1983 and 2002. Since forces generating inequality vary by gender, race and ethnicity, we examine trends for white, black and Hispanic men and women in our study. We find a modest decrease in both gender and racial inequality in access to desirable occupations and an increase in inequality between Hispanics and members of the other groups. Educational attainment accounts for the progress made by white women and for the declines of Hispanic men. It does not explain changes for African-Americans, either between men and women or when compared to whites. Our findings suggest that for African-American men in particular, investment in higher education is less effective as mechanism for increasing access to attractive occupations than human capital theory might predict.

Economic inequality in the United States has been increasing for a number of years (DiPrete 2007). Indeed, with the exception of an expansionary period in the late 1990s, the last few decades have been characterized by minimal growth, joblessness and wage erosion (Mishel et al. 2006). Amid this contraction, however, some groups have fared better than others. Women have not reached parity with men, but have gained in real wages over time. In contrast, improvements in the income gap between whites and blacks reversed in recent years (Morris and Western 1999), and wage erosion was concentrated in occupations employing large numbers of white women and black men Catanzarite (2003).

During the same time period, another form of inequality, differential educational attainment, has decreased. Women have made substantial gains in educational achievement and are now more likely than their male counterparts to attend college, graduate and enroll in post-graduate study (Bae et al. 2000; DiPrete and Buchmann 2006; England et al. 2007). Percentage increases in the postsecondary completion rates of black men and black, white and Hispanic women have outpaced those of white men (U.S. Bureau of the Census 2005).

Human capital theory is often used to explain why groups might pursue educational opportunities, arguing that individuals invest in skill development with the expectation that it will generate attractive returns in job and wage prospects. Past research has found that educational differences explain at least some of the wage and employment disparities between groups, but we know little about the impact of increasing levels of education on the kinds of occupations that women and racial/ethnic minorities enter.

In this paper, we are interested in the relationship between educational investment and access to attractive occupations. This has become especially important in recent years: although white women and minorities have made substantial educational gains, wage inequality within U.S. labor markets endures (Tomaskovic-Devey et al. 2006). Occupations are a crucial mechanism for allocating resources within labor markets, but we know little about the types of occupations that particular groups are entering. Increased educational attainment may provide underrepresented groups with a vehicle for accessing better jobs in ways not captured by individual earnings (Semyonov and Lewin-Epstein 2009), and this may vary by race, ethnicity and gender.

We focus on the impact of changing college completion rates on movement into desirable occupations, examining the time period between 1983 and 2002. We use occupational earnings, authority and prestige as indicators of attractive occupations and include white, black and Hispanic men and women in our study.[i] Using ideas generated from human capital theory, we ask whether changes in college completion rates contribute to increases in the distribution of certain gender, race and ethnic groups in attractive occupations in predicted ways. Specifically, we address: a) whether changes in the college graduation rates of groups contribute to changes between groups in access to attractive occupations; and b) if the college educational investments of various groups are rewarded equally. In doing so, we contribute to the literature on the role of education in decreasing inequality by evaluating the impact of college investment on occupational outcomes.

Human Capital Theory, Education and Occupational Attainment

Human capital theory, with its assumption that individuals invest in skills and training with expectations of attractive workplace returns, is well known in studies of labor force participation. Education, as a form of human capital, is particularly important in thinking about employment inequities and, here, the question is fundamental: To what extent do differences in educational levels explain labor market disparities?

Most work in this area has concentrated on wages or employment status. Findings suggest that education has a significant impact on both racial differences in wages (Tomaskovic-Devey 1993; Jacobs and Blair-Loy 1996; Alon and Tienda 2005) and the employment gap between white women on the one hand, and Hispanic and black women on the other (England et al. 2004). For Hispanics, differences in educational attainment and cognitive skills help explain the wage gap between whites and Latinos (England et al. 1999). Educational attainment also contributes to widening wage disparities between Latinas and white women (Browne and Askew 2005), and to variation in authority wielding between Hispanic and white men (Elliott and Smith 2004).

Returns on human capital investments vary by race, ethnicity and gender, however. In comparing African-American and whites, for example, level of education accounts for only about half of the wage gap between men and around three-quarters for women (England et al. 1999). Other work has found that the relationship between educational attainment and layoffs varies by race (Wilson and McBrier 2005). Similarly, educational attainment explains only a portion of the wage difference between men and women, and recent work examining the college educated found that the gender gap in wages endures even when college major is taken into account (Shauman 2005; Bobbitt-Zeher 2007).

We know much less about gender, ethnic and racial differences in occupational attainment, even though occupations remain important dimensions of social stratification (Weeden and Grusky 2005). Earlier research documented trends towards increased inter-group equality, although the rate of change seemed to be greater in the 1960s and 1970s than in the 1980s (see Featherman and Hauser 1978; DiPrete and Grusky 1990). This work did not focus on the relationship between level of education and occupational attainment, but it did demonstrate that for the period between 1962 and 1973, at least, declines in educational inequality between African-American and white men accounted for most of the observed reduction in the occupational status differential between the two groups (Featherman and Hauser 1978). Neither the role of a college degree in this process nor gender differences by race or ethnicity were considered, however. These issues have become particularly important in recent years, given the marked increase in college completion rates of underrepresented groups and our understanding that gendered outcomes vary by race and ethnicity. Moreover, the little research available suggests that the impact of higher education does vary: a post-graduate degree insulates white women in white collar occupations from downward mobility in ways not experienced by either African-American or Hispanic women (Wilson 2009).

Finally, although the literature has emphasized the monetary rewards for educational investments, it is clear that returns may take multiple forms (DiPrete and Buchmann 2006). For this reason, we use three measures of occupational attractiveness: occupational earnings, occupational authority and occupational prestige.

Smith (2002:511) underscores the importance of authority noting that it carries status, is psychologically rewarding, and is related to both job satisfaction and autonomy; indeed, it is “a highly coveted workplace resource.” Occupational prestige is well understood as a symbolic reward: Weber (Gerth and Mills 1958) emphasized the importance of prestige in his concept of social honor, suggesting that the shared life styles and intragroup recognition among status groups members is highly consequential. Zhou (2005) suggests it measures collective beliefs about the legitimacy of an occupation and is related to, but distinct from, other rewards, making it a “status ordering phenomenon” (p. 94). Thus, our three measures of occupational attractiveness tap different dimensions of occupational attainment and allow us to evaluate whether the types of returns on educational investment vary by race, ethnicity and gender.

Analytic Strategy

Data from the Current Population Survey, presented in Table 1, summarize recent trends in educational attainment. Every group under investigation increased its college completion rates but, proportionately, men lagged behind women and whites lagged behind African-Americans. The percentage of white men who earned bachelor’s degrees rose from about 26% to 33% between 1983 and 2002, the time period of our analysis,[ii] but for white women, the figure grew from 20% to 32%. African-American men and women experienced increases from 11% to 18% and 12% to 19%, respectively, with Hispanic rates rising from 8% to 10% for men and 9% to 13% for women. Note that the gender differences in these rates were markedly smaller among minorities than whites, which helps explain why college campuses are feeling the impact of rising attendance rates of white women, in particular.

These relationships are summarized by the odds-ratios presented in Table 2, which measure the probability of completing college (versus not) for pairs of racial, ethnic and gender groups over time. We use changes in these higher educational completion rates by group between 1983 and 2002 to formulate hypotheses on changing inequality patterns that are consistent with the assumptions of human capital theory. Concretely, we fit a series of logistic regression models in which the dependent variable is college completion (or not) while the independent variables are group membership (sex, race or ethnicity), year, and the interaction effect between group membership and year. Thus, if an interaction effect is statistically significant, we predict that inequality between the groups in question will change.

For example, the predicted odds-ratio of 1.418 for white men and white women in 1983 means that the odds of white men finishing college (as opposed to not) were nearly 50% greater than those of white women. The trend in this odds-ratio is downward, however: by 2002 the predicted odds were almost equal (a ratio of 1.026). The increases in college graduation rates of these women, when compared to white men, are statistically significant, so we predict that inequality between the groups will decrease over time. In this way, we compare gender differences within racial and ethnic groups, as well as racial differences by gender.

Our predictions are listed in Table 2. Since increases in the college graduation rates of white women and African-American men, when compared to white men, are statistically significant, we hypothesize that inequality between white men on the one hand, and white women and African-American men on the other, will decrease over time. We also anticipate a decrease in gender inequality between Hispanics, but predict little or no change among African-Americans. We hypothesize that differences in access to desirable occupations between Hispanic and other men will increase over time. And finally, Latina’s educational accomplishments suggest no change when compared to other women, but we expect the gap between white and African-American women to have increased over time.

Although we focus on the impact of college completion, it is important to note that there have been changes in inter-group differences at other levels of education as well. We address this issue in the discussion section of the paper.

Data and Methods

Our data come primarily from March Current Population Surveys (CPS) between 1983 and 2002. This time frame is attractive for two reasons. First, the occupational classification schemes employed by the Census Bureau during these years (the 1980 and 1990) are virtually identical. We can thus be sure that any trends we discover are not artifacts of changed occupational classification schemes.[iii] Second, this time period saw statistically significant changes in college completion rates between about two-thirds of the race/ethnic and gender pairs under investigation and is, thus, very well suited to test our hypotheses about the impact of recent changes in educational attainment. To prevent the inclusion of the same respondents from surveys of contiguous years, we utilize outgoing-rotation respondents only. Also, we weight the data utilizing the CPS variable “perwt,” and the total sample size after listwise deletion of missing data is 684,928.

We use occupational earnings to capture the monetary aspect of occupational attainment and compute it utilizing aggregated individual-level data from the 1990 Decennial Census; this year represents, approximately, the mid-point of our 1983-2002 analytical period.[iv] For each detailed occupation, we convert the mean earnings for all workers with earnings to constant 2007 dollars. The authority level of an occupation is measured using data from the 1989-2006, pooled General Social Survey (GSS). For individuals in the GSS, authority is measured using a three-point scale: 2 denotes someone who supervises but is not supervised; 1 refers to someone who supervises and is supervised; while 0 indicates an individual who does not supervise anyone. We compute the mean authority level for each detailed occupation in the GSS by aggregating these data on individuals. For occupational prestige we use the Nakao-Treas Occupational Prestige Scores (Nakao and Treas 1994). These scores were constructed using data from the 1989 GSS and were meant to provide an update to the older Hodge-Siegel-Rossi scores from the 1960s. In addition, they were developed specifically for the 1980 Census Occupational Classification.

College completion is measured using a dummy variable. Between 1983 and 1991 the CPS recorded the number of years of primary school, secondary school, or college completed; between 1992 and 2002 it recorded years completed up to grade 12 and the highest credential received for levels beyond that. Thus, for the 1983-1991 data, we code respondents who have completed four or more years of college as having graduated from college, and for the 1992-2002 data we code respondents with a Bachelor’s Degree or more as having graduated from college.[v]

We also include several variables that are often used as controls in analyses such as this: occupational growth, job experience, experience squared, marital status, region, the number of children at home, the number of children at home under 5 years of age, and whether the respondent works in the public sector. Growth is measured by the ratio of the number of incumbents in an occupation from the 1990 Decennial Census to the same number from the 1980 Census. Job experience is computed using the well known proxy, age-years of education-6, and marital status is a dummy variable indicating whether the respondent is married. Region refers to the respondent’s Census region of residence from the Current Population Survey: New England, Middle Atlantic, South Atlantic, East North Central, West North Central, East South Central, West South Central, Mountain, and Pacific. Measurement of the other variables is self-explanatory.

Using Ordinary Least Squares, we begin by regressing each occupational characteristic on the control variables, survey year, a dummy variable for the inter-group difference of the pair of interest, and the interaction effect between this dummy variable and survey year to ascertain the trend in the difference. In the gender analyses, the dummy variables are coded 1=male/0=female. For the race/ethnic analyses, they are coded 1=white/0=African-American, 1=white/0=Hispanic and 1=African-American/0=Hispanic. We then enter a dummy variable for college completion into the model to evaluate the extent to which changes in educational attainment explain these trends.

Findings

To provide some baseline information, we present mean values in 1983 of the occupational characteristics that we use to measure attractiveness (Table 3). Inter-group differences on these dimensions are well known in the stratification literature, but it is interesting to note the similarities between African-Americans and Hispanics. At the beginning of the time period, we see little within-gender differentiation between African-Americans and Hispanics in access to attractive occupations. Note also that there are only small within-race/ethnicity gender differences in occupational prestige.

Table 4 presents trends in gender differences in access to desirable occupations by race and ethnicity for the period 1983-2002.[vi] The top panel indicates whether the changes over time are statistically significant. In the case of occupational earnings among African-Americans, for example, the negative coefficient means that black women have entered high-earning occupations in greater proportion than their male counterparts. We see that women narrowed the gaps with men in all categories, albeit modestly. White women made the most progress, but even in this case the changes were not large. With regard to occupational earnings, for instance, the gender difference among whites shrank by only about $97 per year. For African-Americans, the earnings differential decreased by about $65 per year, and it declined by roughly $83 for Hispanics; the initial gender differences among these groups were relatively small, however.

The middle panel of the Table examines the role of educational attainment in these results by controlling for college completion, while the bottom panel indicates: 1) whether the changes in the coefficients, after taking college credentialing into account, are statistically significant, and 2) if the changes are consistent with predictions based on human capital theory.

Results indicate that for white women, education matters: college graduation rates contribute to the narrowing of the gender gap in occupational earnings, authority and prestige. For Latinas, they contribute to increased equality in occupational prestige, and if we accept a significance level of p ................
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