The effect of a longer education path on the earnings of graduated students

This paper studies the effect of a longer education path on earnings of recent graduates. The data is derived from Monitor Wetenschappelijk Onderwijs and ordinary least squares regressions are used to measure this effect. Earnings are reflected by monthly income and a dummy variable for a longer education path is used. Controls for ability, personal characteristics and work related characteristics are added to the regression. Robustness checks are performed with hourly wage as the dependent variable, to see if the results are consistent. Next to that, an additional analysis is performed focusing on the two longer education paths used in this research; I investigate whether a more theoretical or practical education path results in higher earnings. This study did not find a difference in earnings between graduated students of the shortest and longer education paths, in line with the findings of Groot and Oosterbeek (1994). This is in favor of the human capital theory, which argues that the human capital one obtained should matter more rather than the education path followed to get there. The additional analysis did not find a consistent effect; there was not a difference in earnings for the theoretical and practical longer education paths, but the robustness check showed that students of the practical path earn on average 8% more compared to students of the theoretical path. Further research into this effect is highly recommended. Other findings of the paper suggest that females significantly earn 12% less, and earnings increase with age. Also, a longer period of unemployment between graduation and a first job results in lower earnings and company size relates positively to earnings.