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 school and 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 post-school 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. Estimated rates of return to post-school investment are about 9 to 10 percent across alternative occupational career paths, for workers in occupations requiring low and high levels of training or low and high aptitude, and for workers with low and high education levels. Finally, rates of return to post-school training appear to have changed little over the 1973-2000 period, while at the same time returns to schooling increased from roughly 6 to 9 percent. By the late 1990s, rates of return to training in school and post-school training were approximately equal, consistent with theoretical expectations