By Guest Blogger R. Holly Yettick
Your high school diploma may be worth just about as much as the paper it is printed on. According to the findings of a recent study, two academically similar groups of 12th graders ended up earning virtually the same amount of money even though one group had passed their high school exit exams and the other group had failed to earn diplomas after missing the exam cutoff rate by a hair.
In this way, a high school diploma is different from other pieces of paper that do make a big difference. For example, try getting through airport security these days without the signalling power of a state-issued ID.
The study’s authors suggest that employers may rely on references, employment histories, job interviews and other information rather than distinguishing those who have earned a high school diploma versus, say, a certificate of completion. The findings also suggest that schooling and the ability to remain in school are more meaningful than merely possessing the high school diploma credential. That’s because students who earn diplomas are actually different from students who do not. They have learned more and are perhaps more persistent. So, as a group, students with diplomas still earn more than students who drop out. And students who drop out early earn less than students who spend more years in school before dropping out.
To the authors, the main implication of the study is that schooling is not just a way for some individuals to earn a piece of paper that demonstrates that they are superior to others. Instead, education serves the public good by helping to ensure that U.S. workers as a group are more productive.
The study, scheduled to appear in a forthcoming issue of the peer-refereed Journal of Political Economy, used a clever comparison to get at the labor market value of a high school diploma, which is the most widely earned educational credential in the United States. Unlike previous studies, this one concentrated on 89,197 “last-chance” students who made it to the end of the 12th grade without passing the exit exams that the states of Texas and Florida required in order to earn a high school diploma. The study then further whittled down this sample to a group of students who all earned nearly identifical scores on the exit exams they took during their senior years. Despite the similarity of their test scores, a big difference divided this group. Half had earned scores just high enough the pass their exams by the skins of their teeth. The other half had earned scores just below the cutoff, and failed. Although this second group had performed nearly identically to the passers and also completed 12 years of school, virtually none of the failers would go onto to collect an actual diploma.
All the last-chance students had been 10th-graders in the springs of 1991 through 2003. So the authors were able to track their cohorts for up to 11 years through the labor market and postsecondary education systems. To me, this is one of the more compelling aspects of the research since educational outcomes can be slow to emerge yet many studies are based on shorter-term outcomes that are easier, less expensive, and quicker to use.
The authors found virtually no difference in the annual earnings of the passers and the failers of the last-chance exam. By contrast, students who badly flunked the exam did end up earning signifcantly less than those who only just missed the cutoff. So meaningful differences in exam scores were associated with meaningful differences in future earnings. By contrast, the passers and failers did not have meaningfully different test scores. The passers just had diplomas.
Although the exams themselves were not the focus of this study, the findings do raise questions about the validity of denying diplomas to students who scored just below the cutoff point. While the study did not find any differences in labor market earnings, it is possible that the lack of a diploma impacted these students in other ways.
Additionally, in order to strip away the noisy extraneous factors that might have drowned out the impact of the high school diploma, the study focused on a group of students who generally did not do so well in school, such as those who made it to the end of the 12th grade without passing their high school exit exams. For students who are more academically inclined, the lack of a high school diploma would have made it difficult to earn postsecondary degrees, which are associated with higher earnings.
One issue mentioned by the study authors is that people without high school diplomas could simply be lying to employers or showing forgeries. In turn, employers may not value high school diplomas to the point that they are willing to spend time and money verifying that they exist. I found this interesting because the authors note that high schools do not have a legal obligation to cooperate with employers’ requests to verify that job applicants have received diplomas. They report that, in the 1980s, 1,200 applicants to Nationwide Insurance granted the company permission to request their high school records. The company received just 93 responses.
The Signaling Value of a High School Diploma was co-authored by Damon Clark, an assistant professor in the department of economics at the University of California and Paco Martorell, a RAND associate and professor at Pardee RAND Graduate School. An earlier version is available for free as a working paper from Princeton University.