Should you get a higher education? The trade-off between education and work experience

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• Labour WI final paper

ABSTRACT

This paper seeks to theoretically explain the trade-off between individuals choosing an additional year of schooling over entering the labour force or vice-versa. To understand this, the theory of the ‘wage schooling locus’ is explored in the Indian context. The insights so derived help in analysing the relationship between net hourly wages and years of education; and net hourly wages and work experience (or tenure). Further, each of these analyses have been examined against the axis of gender. Based on the analysis, it was found that the wage-schooling locus holds true for higher levels of education. It was found that individuals with a three years Bachelor’s degree should continue with their higher education pursuits. In terms of work experience, males who finish their Master’s degree must work for more than 10 years to maximise their increase in wage. Moreover, the correlation of years of education and tenure is stronger for men than for women.