Yet Another Credential? The Determinants and Effects of Doctoral Education

Given the EU’s goal to become and stay a knowledge-based economy, Europe needs to increase its numbers in researchers. This brings forth the call for more doctoral graduates. In this book, I discuss the determinants and effects of doctoral education. After looking at the effect of the curricular structure on doctoral enrolment rates, I investigate the doctoral wage premiums in the context of wage differences across majors and the gender wage gap. Based on Spence’s signalling theory, Chapter 3 argues that in two-cycle systems, individuals in second cycle studies (e.g. master) have already distinguished themselves from the less productive ones who left college after their first college level degree (e.g. bachelor). Hence, I expect second cycle graduates to enrol less often in doctoral education than college graduates in one-cycle systems (e.g. German Diplom) whose only chance to distinguish from the less productive college graduates is by attaining a doctoral degree. Based on a random effects model on 23 European countries between 1995 and 2005, I can confirm this hypothesis. Chapter 4 argues that doctoral studies impart research skills. These skills are particularly important in fields that impart predominantly time-erodible human capital (i.e. knowledge that erodes over time if not constantly renewed) as they enable doctoral graduates to refresh their knowledge on their own. Hence, employers in need of knowledge imparted by time-erodible majors are willing to remunerate doctoral degrees and the accompanying skills. Employers of time-durable major graduates, however, do not need their employees to constantly renew their knowledge and will therefore not remunerate doctoral degrees. To investigate the doctoral wage premium in both time-durable and time-erodible major groups, I use data from the German DZHW Graduate Panel of the examination cohort 2005. The results of separate OLS regressions indicate that while holding a doctoral degree increases monthly wages of time-erodible major graduates, it does not increase wages of time-durable major graduates. Chapter 5 investigates gender differences in the doctoral wage premium in mixed majors (e.g. majors that impart neither predominantly time-erodible nor time-durable human capital). Assuming that family-oriented individuals prefer time-durable majors, while career-oriented people opt for time-erodible ones, we expect the mere graduation from these majors as a signal for family orientation (time-durable majors) or career orientation (time-erodible majors). Thus, while employers interested in these graduates have a clear idea about their work attitudes, employers of mixed major graduates are unsure about the individual’s work attitude. In lack of any signal, these employers might use one’s gender to infer her work attitude, assuming women to be – on average – family-oriented and men to be career-oriented. Attaining a doctoral degree allows a career-oriented woman to signal her career orientation and to gain higher wages compared to women without a doctorate. As men are already assumed to be career-oriented, having a doctoral degree does not hold such signalling effect. Hence, we expect higher doctoral wage premiums for women than men in mixed majors. The results of an Oaxaca-Binder decomposition support this hypothesis