A r c h i v e d  I n f o r m a t i o n

Educational and Labor Market Performance of GED Recipients - February 1998

Labor Market Performance of GED Recipients (continued)

Longitudinal Analyses

We turn from cross-sectional analyses, which compared the labor market performance of GEDs, dropouts, and high school graduates at points in time, to longitudinal analyses which examine the performance of GEDs (and usually dropouts) before and after attainment of the credential. We begin with analyses based on the NLSY, then review evidence from two evaluations, and finally examine data from follow-up surveys of GED recipients.

National Longitudinal Survey of Youth (NSLY) Data

Cameron and Heckman (1993) identified 107 males in the NLSY who were employed both before and after receiving a GED certificate. They found that hourly wages increased from $6.18 per hour the year before receipt of the GED to $6.36 per hour the year after; hours worked per year increased from 1,541 to 1,563. Neither of these differences was large enough to be statistically significant, given the sample size.

Cameron (1994) used before and after evidence to study the effect of GED attainment for females. His method was to pool all observations on hourly wages during the sample period, 1979-80, for people who had not completed any college. If an individual obtained a GED at any time during this period, a variable indicated whether the wage observation occurred before the GED or afterward. The author examined wages for high school dropouts, GED recipients, and high school graduates, controlling for age, ethnicity, year, and local unemployment rate.[57] Cameron found that these female GED recipients earned on average 10.8 percent more than dropouts before getting the GED and 12.1 percent more afterwards. In another specification of the model, he controlled for accumulated work experience and months of training (vocational, company-provided, and apprenticeship) to remove indirect effects. With this specification, he found that GED recipients earned 5.1 percent more than other dropouts before and 5.9 percent more after earning the GED. These slight changes were insufficient to permit a conclusion that GED recipients increased their earnings after receiving the GED.

Murnane et al. (1995) also studied the effect of GED certification for males in the NLSY. Their method was to pool all hourly wage observations for people who dropped out of high school, including those who later passed the GED. One variable identified individuals who obtained a GED at any time during the sample period; another variable indicated whether the observation occurred before the GED or afterwards.[58] The specification of the model included labor force experience and an interaction between experience and receipt of the GED.

Analyzing data separately for whites, blacks, and Hispanics, the authors found that the GED had a positive effect on the rate of wage growth. There was no initial effect, but over time, GED wages grew more rapidly than they would have had the individuals not received GED certification. Hours worked per year also dropped initially after receipt of the GED, but then climbed faster than before. However, the change in hours worked was slight, and the authors were unable to reject the null hypothesis that acquisition of a GED had no impact on labor supply. They suggested that the GED's observed positive effects on wages may be indirect, through additional training and job search. The authors emphasized that the GED wage effects, while positive, are modest and do not provide a powerful tool for reducing poverty.

The findings in this study parallel those in Tyler et al., showing that the GED yields economic benefits and that the benefits increase over time. Both studies suggest that the GED may work through additional education and training, and through job search, to increase compensation.[59]

Evaluations

Earlier we discussed Cave and Bos' (1994) analysis of the JOBSTART program, which was designed to help high school dropouts reading below the eighth grade level. The program provided many hours of basic education instruction and encouraged participants to take the GED Tests as a culmination and validation of their efforts to improve their skills. Bos (1995) used monthly data collected over a 4-year period to help evaluate the program. He pooled the 48 months of data for each of approximately 2,000 participants in the evaluation (half from the experimental group and half from the control group). His model treated current monthly earnings as determined by level of involvement in basic education during the month, accumulated time in basic education up to the beginning of the month, possession of a GED credential, and other factors. He reported that having the GED was associated with $47.37 higher monthly earnings for males and females combined. His methodology made use of individual fixed effects, which capture effects of unobserved characteristics of an individual that are unchanging over time.

Bos (1996) also evaluated New Chance, a national demonstration project for mothers on welfare. Enrollment in the program was limited to young women who were teenagers when they had their first child, who were receiving AFDC, who had not completed high school, who were between 16 and 22 years old at baseline, and who were not pregnant. Bos' analytic approach was similar to the one employed in the analysis of the JOBSTART data. He pooled 42 months of data on earnings, weeks of education (basic education, training, and college), and receipt of credentials (GED, diploma, trade license certificate), and he employed individual fixed effects to capture the effects of unobservable characteristics. Bos found that receipt of the GED was associated with $29.24 higher monthly earnings. He also estimated models with a term to capture the effect of age on earnings and another to account for number of children. The GED effect only fell to $27.31. Finally, he added a term for weeks of work since enrolling in the project. The GED effect fell further to $22.60. However, these estimates represented 8 to 10 percent increases in earnings, as the average sample members earned $280 in the last month of the follow-up.

These GED effects on earnings are net of the effect of adult basic education on earnings. Bos found that weeks of basic education were negatively associated with earnings, possibly because a person tends to work less in order to participate in basic education. On the other hand, Bos found strong positive effects of weeks in job training and obtaining a trade license. Simulating the cumulative effects of education and education credentials on 42-month earnings, he estimated that a combination of 26 weeks of basic education and a GED credential had a small negative effect, whereas 26 weeks of basic education, a GED credential, 26 weeks of job training, and a certificate had a large positive effect. Bos also found positive effects for the combination of basic education, a GED, and 2 years of college. He concluded that "because remedial basic education and a GED are often considered necessary to gain access to more advanced training opportunities, they may be useful components of programs for young school dropouts. However, participants should be made aware that basic education has little value by itself and should be strongly induced to pursue post-GED training and credentials."

The evidence from JOBSTART and New Chance suggests the GED credential may be an important part of a strategy for disadvantaged high school dropouts to improve their economic position. The strategy is to obtain the basic or remedial education needed to pass the GED and through the GED to obtain further job-related training and associated credentials.

Evidence from GED Follow-up Studies

Follow-up surveys have been used to learn about such things as the subsequent employment and education of GED examinees, together with the respondents' views of the benefits or disappointments of participating in the tests. These surveys often provide before and after comparisons based on respondents' perceptions and judgments. Some provide nonGED comparison groups, but most do not, and most have significant methodological limitations.[60] One study that used a comparison group (Kroll and Qi 1995) showed that the wages of GED recipients increased more after the test than those of GED examinees who did not pass the tests. The studies and some of their results are described in appendix D.

Eight of these studies provided before and after information on employment for GED recipients. Seven of the eight showed that full-time employment rates increased after receipt of the GED. Part-time employment rates went down or stayed about the same, and most unemployment rates went down. Since people's chances of finding employment increase with age (up to a point), we cannot tell whether or to what extent receipt of a GED was a factor in the observed gains.

The increase in all employment and full-time employment is consistent with the results of the controlled analyses in table B-6 (examined earlier). The decrease in unemployment rates is consistent with the simple comparisons in table B-6, but not with the findings of the more sophisticated multivariate analyses, and preference has to be given to the results of the latter. In short, these findings from the GED followup surveys tend to support the conclusion that GED attainment increases employment opportunities.
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