Do the math: High school mathematics courses and the earnings of high school graduates

This thesis is an empirical analysis of the effect of high school mathematics courses on the earnings of male and female graduates of the class of 1982 using High School and Beyond (HSB), a national longitudinal study of this cohort. This thesis hypothesizes that there is a qualitative difference between those classes that teach algebra skills and those classes that reinforce training in arithmetic. Measures of mathematics attainment that permit examination of this distinction are constructed by exploiting the details in the HSB transcript data. Evidence that the distinction between algebra and arithmetic is important is provided, as well as evidence that the measures used capture meaningful differences in the mathematics attainment of students. This thesis also the relationship between mathematics courses and earnings and specifically explores two potential avenues through which mathematics courses could affect earnings: a direct effect through increases in cognitive skill or productivity and an indirect effect through increases in educational attainment. The first econometric analysis uses simple methods and models to investigate the relationship between mathematics attainment and earnings nine years after graduation as well as the sensitivity of the estimated effects to controlling for intended educational attainment, and among women to controlling for labor force attachment. The second econometric analysis uses an endogenous switching model to investigate the effect of mathematics attainment on the estimated lifetime earnings of the male respondents where mathematics attainment affects both lifetime earnings and the probability of attaining a bachelor's degree. In contrast to the literature, this thesis finds positive effects of additional mathematics course work on earnings through increasing educational attainment and through increasing cognitive skill. Furthermore, this thesis provides evidence that the positive marginal effects of mathematics classes on earnings are restricted to algebra-based classes.