Policy Seminar: Is there a PhD premium in The Netherlands?

Time: 13.00-14.00 hours
Location: CPB-office, Van Stolkweg 14, The Hague

Presentation: Bram Wouterse (CPB)

Discussant: Jos de Jonge (Rathenau Instituut)

Language: English

Registration:  Please register by sending an email to polinars@cpb.nl.

Abstract subject:
The number of PhD defenses in The Netherlands has risen sharply over the last decades - by more than seventy percent since 2000. To defend a PhD thesis successfully is a great achievement to the individual. But to what extent will a young doctor benefit from this achievement in terms of labor market outcomes? In this paper we investigate the individual returns to a doctorate education in The Netherlands over the first twenty years of a career. We find that, compared to especially Germany and Switzerland, the PhD premium in terms of income is relatively low in the Netherlands. The first twenty years after their Master graduation, Dutch PhDs earn on average less than comparable peers with a masters degree. Our unique dataset enables us to study the dynamics of the (negative) PhD premium. The income gap is largest in the first years after graduation and closes shortly before the twenty year period terminates. This pattern suggests that there may be a small positive PhD premium over the entire career. The individual returns strongly differ by sex and by field of study. Female PhDs actually earn more than Master graduates in the first twenty years after graduation, on average 9 percent more, whereas male PhDs earn on average 8 percent less than their counterparts. The positive income premium for women is partly driven by the fact that female PhDs work more hours than Master graduates. Having a PhD in Business or Economics yields the largest negative returns, whereas the picture is less negative for PhDs who graduated in Humanities and (other) Social Sciences. In terms of employment and dependency on social benefits, PhDs and Masters on average have similar experiences during the first twenty years of their career. Surprisingly, despite the strong increase in PhD defenses and the stable number of permanent positions in academia, young doctors were just as likely to obtain a position in academia in 2010 as those that defended their thesis in 1995. We believe this can be explained by both the strong increase in post-doc positions and the strong increase in foreign PhD students in The Netherlands, who are more likely to leave the Netherlands after their defense.

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