College Premium and Its Impact on Racial and Gender Differentials in Earnings and Future Old-age Income

Working Paper*, Mar 15, 2019

Returns to college education have been growing over the last several decades and are likely to continue growing in the future, but they are not the same for all, providing different incentives to invest in education. This study explores the role that race and gender play in the earnings of college-educated workers and projects old-age income in 2050. It estimates returns to college in earnings and old-age income by race and gender. It also estimates the effects of race and gender wage discrimination on earnings and old-age income. The study uses microsimulation techniques to simulate a baseline and two counterfactual scenarios. It finds that white women receive the highest returns to college education in earnings, followed by black women. Race-based wage discrimination, which is substantial and persistent over the working lives of individuals, results in large loss of lifetime earnings for black women and men.

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Damir Cosic

Damir Cosic is a research associate in the Income and Benefits Policy Center at Urban Institute and part of a group that studies retirement income and benefits. He works on the development of the DYNASIM microsimulation model and uses the model to study retirement related policy issues. He is particularly interested in labor market outcomes and their effect on income distribution of older individuals.

Mr. Cosic received his PhD in economics from the Graduate Center at the City University of New York, where he focused on studying income and wealth inequality. In addition to research, he taught various courses in economics to undergraduate and graduate students.

*This working paper was made possible by the US 2050 project, supported by the Peter G. Peterson Foundation and the Ford Foundation. The statements made and views expressed are solely the responsibility of the authors.

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