Panel Paper: Beyond Traditional Educational Credentials: The Labor Market Returns to Licenses and Certifications

Friday, November 9, 2018
Jefferson - Mezz Level (Marriott Wardman Park)

*Names in bold indicate Presenter

Matthew D. Baird, Robert Bozick and Melanie Zaber, RAND Corporation

While occupational credentials have been a part of any labor market at all times, significantly more attention has gone to estimating the returns to formal education. In this paper, we evaluate a new module of the Current Population Survey which asks questions on the certificate and license statuses of respondents. Using an instrumental variables approach, we evaluate the impact of these credentials on employment status, and then perform a decomposition on the effect of these on earnings, both at the intensive margin (higher wages conditional on working) and the extensive margin (higher likelihood of being employed, and thus receiving a wage). We document several key findings, and show how the returns differ across various worker characteristics, including bachelor’s degree holders and above versus those with fewer years of education, reinforcing the narrative of the role that these credentials can play in both developing human capital and signaling to potential employers quality.

Full Paper: