Credential Devaluation in U.S. Labor Markets: Differential Returns to Education by Race and Gender

• In Event: Inequality, Poverty, and Mobility Section Roundtables
  In Refereed Roundtable (60 minute): 3. Inequality and the Labor Market

Abstract

Do educational credentials deliver equal income returns regardless of holder characteristics? This paper examines whether bachelor's degrees yield differential economic returns across race-gender groups, testing the credential devaluation hypothesis using General Social Survey data (2016-2024, N=6,151).

I employ interaction models that calculate the income premium from obtaining a bachelor's degree within each race-gender group, then test whether these returns differ significantly across groups. This approach distinguishes credential devaluation (differential returns to the same degree) from baseline penalties that exist independent of education.

Results reveal substantial variation in college returns. White men earn an average college premium of $34,347 annually. Black men earn approximately $14,681—a 57% reduction in returns to the same credential (p < 0.001). White women earn $24,727 (28% less than White men), while Black women earn $26,038 (76% of White men's returns). These disparities are highly significant and substantively large.

Nested model comparisons test whether differential returns reflect field segregation or within-field devaluation. Controlling for field of study, Black men still earn $11,214 less in college returns than White men (p = 0.024). Field segregation explains 43% of differential returns; within-field credential devaluation accounts for the remaining 57%.

These findings suggest that educational credentials do not function as neutral income-generating assets valued equally regardless of holder. Labor markets systematically devalue credentials held by Black men, delivering them less than half the economic returns that White men receive for identical degrees. The intersectional pattern—with Black women receiving higher returns than Black men—suggests that devaluation operates through group-specific mechanisms rather than universal racial penalties.

The results have implications for understanding income inequality and social mobility. If credentials are systematically devalued, expanding educational access alone may be insufficient to close income gaps.

Author

• Amy Cancryn Cancryn, Universitat Pompeu Fabra