37 Chapter 3: Methodology in earnings, equal to $2.6 million. This value represents the higher wages that accrue to students at the midpoint of their careers and is calculated based on the marginal wage increases of the CHEs that students complete while attending the college. Using the state of New York earnings for the mapped occupations, the average marginal wage increase per CHE is $295. For a full description of the methodology used to derive the $2.6 million, see Appendix 7. The second step is to project the $2.6 million annual increase in earnings into the future, for as long as students remain in the workforce. We do this using the Mincer function to predict the change in earnings at each point in an individual’s working career.37 The Mincer function originated fromMincer’s seminal work on human capital (1958). The function estimates earnings using an individual’s years of education and post-schooling experience. While some have criticized Mincer’s earnings function, it is still upheld in recent data and has served as the foundation for a variety of research pertaining to labor economics. Card (1999 and 2001) addresses a number of these criticisms using U.S. based research over the last three decades and concludes that any upward bias in the Mincer parameters is on the order of 10% or less. We use statespecific and education level-specific Mincer coefficients. To account for any upward bias, we incorporate a 10% reduction in our projected earnings, otherwise known as the ability bias. With the $2.6 million representing the students’ higher earnings at the midpoint of their careers, we apply scalars from the Mincer function to yield a stream of projected future benefits that gradually increase from the time students enter the workforce, peak shortly after the career midpoint, and then dampen slightly as students approach retirement at age 67. This earnings stream appears in Column 2 of Table 3.4. 37 Appendix 7 provides more information on the Mincer function and how it is used to predict future earnings growth. Figure 3.1: Lifetime earnings of a Business program graduate compared to a high school graduate High school graduate Program completer Annual earnings Age (years) $60,000 $40,000 $30,000 $20,000 $10,000 $0 $50,000 24 26 28 30 34 36 38 40 42 44 46 48 50 32 52 54 56 58 60 62 64 66 Source: Lightcast impact model
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