Monetary Returns to Doctoral Degrees: Wage Differentials between Graduates with and without a Doctoral Degree in Private and Public Sector Employment

Abstract

Doctorate holders are said to be the driving forces behind scientific and economic progress. Thus we ask if and why a doctoral degree pays off on the labour market. Employing job-competition-theory we look at executive positions and sophisticated work contents. Furthermore, we consider imbalances on the labour market as well as the placement in closed labour market segments. To answer the question we run linear regression models and Blinder-Oaxaca-decompositions in order to provide quantification and causal analysis for wage differences between higher education graduates with and without a doctorate. The data basis comprises the third wave of the DZHW-graduate panel studies 2005-cohort. Graduates with a doctoral degree receive higher wages compared to those without. This is true for both the public and the private sector. Due to varying mechanisms for the formation of wages, individual performance indicators matter in the private sector, whereas holding executive positions is more important in public service to explain the pay gap between higher education graduates with and without a doctorate.