Converting education into earnings: The patterns among Hispanic origin men

Abstract

We evaluate the functional form of the relationship between education and earnings for Hispanic and non-Hispanic white men to determine whether the payoffs to education vary with level of schooling, and whether credential effects can be discerned. Results indicate that for all groups the usual linear specification, while offering the advantage of parsimony, fits the data less well than more complex models. The levels model best predicts the earnings of Puerto Rican and other Spanish origin workers, while the credential model is best suited for Mexican, Central/South American, and non-Hispanic white men. Credential effects accrue to all groups, except the other Spanish, but Central/South Americans only receive added income bonuses for the completion of a college degree, whereas Mexican, Puerto Rican, and non-Hispanic white men also receive a bonus for a high school diploma.