You’re right, figure 3 doesn’t answer your question. But your point/topic is not addressing my original point. My point above was that income before taxes alone is what you need to evaluate whether the student loan program offsets the student loan default rate. The financial return on investment of the student loan program is determined solely by the increase in income, not the wealth premium.
However, your conclusion isn’t shared by the authors. They show a positive return on college degrees, it’s just smaller than the unadjusted difference in income.
One probable factor for this is cultural bias toward giving jobs to people with degrees, and paying employees more who have degrees. Individual skills alone do not explain the difference in earnings, so despite the fact that talent correllates with income, the correlation is not 1, and thus it is not likely that the same people earn equal or greater without a degree than with. It is likely that the same person without a degree will earn less than with a degree, on average.
To address your separate point directly, there are studies that attempt to directly answer the question you’re asking. For example: http://conference.iza.org/conference_files/CoNoCoSk2011/gens...
However, your conclusion isn’t shared by the authors. They show a positive return on college degrees, it’s just smaller than the unadjusted difference in income.
One probable factor for this is cultural bias toward giving jobs to people with degrees, and paying employees more who have degrees. Individual skills alone do not explain the difference in earnings, so despite the fact that talent correllates with income, the correlation is not 1, and thus it is not likely that the same people earn equal or greater without a degree than with. It is likely that the same person without a degree will earn less than with a degree, on average.