Returns to college continue into later life..

Traditional wisdom suggests that individual wages will increase over a person's working life. However, the increase in wages will decrease over time. Traditionally, it has been shown that in later life the earnings profile actually slopes down. That is the person's wage will actually fall in later life.

New research contradicts this findings for college graduates.


Title: Cohort Analysis of US Age-Earnings Profiles
KOSEI FUKUDA Bulletin of Economic Research, Vol. 60, Issue 2, pp. 191-207, April 2008

Abstract: Aggregate data on US earnings, classified by period and by age, are decomposed into age, period and cohort effects, using the Bayesian cohort models, which were developed to overcome the identification problem in cohort analysis. The main findings, obtained by comparing college and high school graduates, are threefold.

First, the age effects show a downward trend for the age group of 45-49 onwards for high school graduates but do not show any such trend for college graduates.

Second, the period effects show a downward trend for high school graduates but reveal no such trend for college graduates.

Third, the cohort effects are negligible for both college and high school graduates.