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FOR IMMEDIATE RELEASE
Date: March 8, 1996
Contact: Mary Caffrey (609) 258-5748
Better Schooling Means Bigger Paychecks for Graduates, Princeton Economists Find in Review of School Funding Studies
Princeton, N.J. -- The quality of a school, as measured by spending and teacher-pupil ratios, makes a big difference in its graduates, paychecks, Princeton economists David Card and Alan B. Krueger write in a new paper that refines their previous conclusions in this area.
In ``Labor Market Effects of School Quality: Theory and Evidence,'' Card and Krueger assert that studies that dismiss a link between school quality and future earnings have looked at samples that are either too small or involve workers who are too young to have cashed in on the full benefits of a good education.
The Princeton economists also conclude that school quality encourages students to stay in school. Length of schooling is well-established as a correlate of economic success.
Card and Krueger first challenged conventional thinking about the tie between a person's quality of schooling and earnings in 1992. At that point few economists were willing to say that higher quality, or more specifically, more resources, produced better results.
But the Princeton economists argued that most scholars had examined student test scores, not the amount those students earn once they enter the work force. Despite the attention this work received, theirs remains a minority viewpoint, says Card, who is Theodore A. Wells '20 Professor of Economics.
So the two Princeton economists have taken a second look. After analyzing nearly 60 articles that deal with various aspects of the debate over school quality, Card and Krueger have refined their views, but their conclusions remain the same.
One reason for the ongoing debate over questions in the economics of education, says Card, is the absence of ``randomized trials.'' Economists have to measure children's performance wherever they go to school; they can't assign identical groups of students to small and large classes, for instance. ``In the absence of such trials, we'll be arguing about these things for 20 years,'' he says.
Using earnings as a measurement of school quality isn't so simple, Card says. ``The effects we're looking for are probably not that big,'' he notes.
Card and Krueger's review of the literature concludes that a 10 percent increase in school spending is associated with a one to two percent increase in earnings later in life. To the layman that may not sound like much of a return, but over the course of a working life of 40 years or more, they say, it's a lot of money.
Card, who came to Princeton in 1983, and Krueger, who arrived in 1987, are practitioners of econometrics, which applies advanced computing and analysis to large amounts of data. The pair are well-known for another study that defied conventional wisdom by showing that increases in the minimum wage do not automatically cause job losses and may even create jobs.
The results of their latest collaboration will be published by the Brookings Institution later this year as part of a volume on school funding. Card says he fully expects that other scholars writing for the volume ``will argue against us. Our view is not widely held,'' he notes.
Krueger, who is Thoman and Bendheim Professor of Economics and Public Affairs, is back on campus this semester after serving as chief economist at the U.S. Department of Labor for a year. He is quick to emphasize that increased earnings are not the only benefit of a quality education. Better schooling may give a graduate more career choices or a better quality of life.
As another example, ``Milton Friedman argued for compulsory schooling because it would lead to a more informed electorate,'' Krueger said. ``There's fairly strong evidence that people who have better schooling vote more.''
In related studies, Krueger has also examined the legacy of segregation between white and black students. In a 1992 paper ``Race and School Quality Since Brown vs. Board of Education," Krueger and coauthors Michael Boozer, who was a Princeton graduate student, and Shari Wolkon, who received her undergraduate degree from Princeton in 1991, suggested that decades of separate and unequal schooling -- with black children in classes sometimes two or three times as large as those in white schools -- causes earnings disparities that will take several generations to overcome.