Money Matters: Returns to School Quality Throughout a Career

Olson, Craig A., and Deena Ackerman
Working paper no. 2004-19


This paper exploits a newly created longitudinal dataset to evaluate the effect of high school resources on the earnings of male wage earners at mid and late career. Using school quality measures like average teacher salary and average years of experience of the teaching force, our regression results show generally large and significant effects of school quality on earnings throughout the careers of our sample members. The positive effects persist at least until the sample members are in their late fifties. Using the parameter estimates from these regressions, we then show that the returns to public investment in school quality are large and well worth the cost. Our calculations suggest a rate of return to marginal increases in school expenditures on teacher salary of about 11 percent. The data were constructed from the Wisconsin Longitudinal Study of the Class of 1957 augmented with historical records from the Wisconsin Department of Public Instruction.