Econ Quiz: Education Premium

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June 2022


For many Wisconsin families, going to college or technical school after high school is an expectation.   However, the increasing costs of pursuing higher education, coupled with rising levels of student debt to linked to those higher costs, tight labor markets, rising wages, and higher tuition bills are leading some students to carefully weigh the long-term benefits of higher education with the short-term costs of tuition, fees and charges and foregone income.

Data from the U.S. Census Bureau suggest that earnings are positively tied to levels of education and that the relationship holds for both rural and urban areas. Across the nation, regardless of the rural-urban breakdown, people with less than a high school degree earn a median of about $25,744 whereas those with a high school degree (or GED) earn a median of $31,548, an associate degree $35,664, bachelor’s degree $47,529 and a graduate or professional degree earn $59,867. 

The increasing returns to higher education also play out differently in rural and urban areas.  For example, the median earnings for those with a bachelor’s degree in all nonmetropolitan counties across the U.S. is $44,579, below the return in metropolitan counties at $52,614.  Thus, it looks like the  education premium is stronger in urban areas than rural areas.

What about Wisconsin?  As with the rest of the nation, the  education premium varies by county and by degree. For example, in the average Wisconsin county the median education premium for an associate degree is $5,089, but that figure soars to $10,995 for associate degree earners in St. Croix County. Likewise, for the average Wisconsin county median education premium for those with a graduate or professional degree relative to a high school degree is $27,862, but ranges from a low of $14,719 (Douglas County) to a high of $45,263 (Waukesha County).

A bachelor’s degree is becoming a default goal for many high school seniors. Again, the education premium varies depending on where one lives in the state, ranging from a low of $5,856 (Juneau County) to a high of $28,444 (Florence County). 

For today’s quiz question, let’s look at the median return across all counties in the Badger state. What is the median education premium across Wisconsin for earning a bachelor’s degree as compared to a high school degree?

A. $28,444

B. $14,210

C. $15,847

D. $23,389

E. $34,001

ANSWER

Answers: C. Youth summer employment bounced back to 2018 levels, but fell short of levels in 2019. In July 2021, 60.5% of all US residents aged 16 to 24 were employed.

Looking at all counties in the Badger State, the median education premium for those with a bachelor’s degree relative to a high school degree is $15,847.

Sources: 
Deller, Steven C. and Parr, Jackson. 2020. “Indebted and Drained: Student Loans and Rural America.” Choices: The Magazine of Food, Farm and Resource Issues. 35(1).
Deller, Steven C. and Parr, Jackson. 2021. “Does Student Loan Debt Hinder Community Well-Being?” International Journal of Community Well-Being. 4(2): 263–285.


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