Goodman, Joshua. "The Labor of Division: Returns to Compulsory Math Coursework." HKS Faculty Research Working Paper Series RWP12-032, August 2012.

Abstract

Labor economists know that a year of schooling raises earnings but have little evidence on the impact of specific courses completed. I identify the impact of math coursework on earnings using the differential timing of state-level increases in high school graduation requirements as a source of exogenous variation. The increased requirements induced large increases in both the completed math coursework and earnings of blacks, particularly black males. Two-sample instrumental variable estimates suggest that each additional year of math raised blacks' earnings by 5-9%, accounting for a large fraction of the value of a year of schooling. Closer analysis suggests that much of this effect comes from black students who attend non-white schools and who will not attend college. The earnings impact of additional math coursework is robust to changes in empirical specification, is not driven by selection into the labor force, and persists when earnings are conditioned on educational attainment. The reforms close one fifth of the earnings gap between black and white males. Estimates for whites are similar to those of blacks but are much noisier due to the reforms' weaker impact on white students' coursework. These results suggest that math coursework is an important determinant of the labor market return to schooling, that simple minimum requirements largely benefit low-skilled students, and that more demanding requirements might be necessary to improve the outcomes of high-skilled students.