published in: Journal of Population Economics, 2006, 19 (4), 769-793
In this paper we explore the labor market returns to the General Education Development
exam, or GED. Using new data from the Current Population Survey, we examine how the
return to the GED varies between U.S. natives and the foreign-born. We find that foreign-born
men who hold a GED but received all of their formal schooling outside of the U.S. earn
significantly more than either foreign-schooled dropouts or individuals with a foreign high
school diploma. For foreign-born men with some U.S. schooling, earning a GED brings
higher wages than a traditional U.S. high school diploma, although this difference is not
statistically significantly different from zero. These patterns stand in contrast to those for U.S.
natives, among whom GED recipients earn less than high school graduates but significantly
more than dropouts. The 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 our findings, they do indicate that the GED may be more valuable in the
labor market than some previous research suggests.
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