Natives, the Foreign-Born and High School Equivalents: New Evidence on the Returns to the GED

In this paper we explore the labor market returns to the General Education Development exam, or GED, using data from the Current Population Survey. We examine how the return to the GED varies between U.S. natives and the foreign-born who received their formal education outside of the U.S. We find that the foreign-schooled with a GED earn significantly higher wages than both foreign-schooled dropouts and foreign-schooled high school graduates. This pattern stands in contrast to that for U.S. natives; among natives, GED recipients earn less than high school graduates, but more than dropouts. These effects for natives appear to become larger over the life cycle and do not seem to be due to cohort effects. While it is difficult to attach a purely causal interpretation to these results, they do indicate that the GED may be more valuable in the labor market, particularly for individuals whose formal schooling was obtained outside of the U.S., than some previous research suggests.