The College Economy: Educational Differences in Labor Market Outcomes

Rajashri Chakrabarti, Thu Pham, Beckett Pierce and Maxim Pinkovskiy

No 20250515, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: It is intuitive that workers with higher levels of education tend to earn more than workers with less education. However, it is also true that workers with more education are much more likely to be employed, and this employment advantage of education has, if anything, grown in recent years. In this post, we document profound differences in labor market outcomes by educational attainment. Drawing on the Economic Heterogeneity Indicators, we find that the gap in employment rates between workers who have completed college and workers who have not is 12 percentage points—which is larger than the employment gaps between workers of different races/ethnicities or between men and women—and is wider than the pre-pandemic gap. Moreover, most of this gap and its recent movements are driven by differences in labor force participation rates rather than by differences in unemployment rates. Fostering higher labor force participation of workers without a college degree thus would be quite helpful in promoting maximum employment.

Keywords: education; employment; labor force participation (search for similar items in EconPapers)
JEL-codes: I26 J24 (search for similar items in EconPapers)
Date: 2025-05-15
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