IZA Seminar - David A. Jaeger (21.07.01): 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 natives in the U.S. and the foreign-born who received their formal education outside of the U.S. We find that the foreign-schooled with a GED earn statistically significantly higher wages than both foreign-schooled dropouts and foreign-school high school graduates. This pattern stands in contrast to natives, where GED recipients earn less than high school graduates, but more than dropouts. These effects appear to become larger over the life cycle and, by comparison to the previous literature, do not seem to be due to cohort effects. While it is difficult to attach a purely causal interpretation to these returns, they do indicate that the GED may be more valuable in the labor market, particularly to those with formal schooling obtained outside of the U.S., than some previous research suggests.