This is a point I keep making—that if you earn a college degree or better, the unemployment rate is 2 percent, whereas if you don’t graduate from high school it’s closer to 7 percent. Moreover, the wage gap between these groups is very significant and continues to grow.Does it pay to stay in school? After taking into consideration the cost of the additional education, opportunity costs, risk and discount factors, and personal preferences, and then comparing it to other investments (which also pay), I rather doubt it pays much, if any, on average. If it does pay to stay in school after such factors are considered, it points to a significant market failure which nobody has yet identified or explained. In other words, if it pays so well, why don't far more people do it, leading to increased supply of skilled labor with a corresponding reduction in skilled wages and a decreased supply of unskilled labor with a corresponding increase in wages until it all balanced out? You know, like any other market. In which case it wouldn't pay relatively better than any other investment once other factors are considered.
Simply put, it pays to stay in school.
I agree that the correlation Kudlow points out is clear. Those who graduate from high school and college are more likely to be employed than those who don't and they're likely to make substantially more money as well. That extra money seems to more than cover direct educational costs and opportunity costs over the course of a lifetime.
However, correlation doesn't indicate causation. There's no direct evidence in Kudlow's statement regarding employment and education that staying in school causes a higher likelihood of employment or higher salaries.
There are many other factors that also play a role in attaining higher wages and success in general. For example, personal characteristics including intelligence, perseverance, intensity, focus, dedication, reliability, willingness to delay gratification, etc. is one such factor. I think that those individuals who possess such traits are more likely to be employed and with a higher wage than those who don't possess such qualities. In addition, it seems to me that those who have such traits are more likely to be able to finish high school and get into and finish college. In other words, I think that those traits are the fundamental causes of success (including higher rates of unemployment and wages), whereas a college degree is only a symptom of having the traits necessary for success.
Can I prove this? Nope. The relevant data is not available. I'm not even sure relevant data can be collected. For example, how exactly do you measure many of these traits?
Can anyone prove me wrong? Nope. The same relevant data is not available. This is just one of those superempirical moments when we simply need to bail on empirical analysis and take refuge in our belief systems. Kudlow believes that staying in school pays. I doubt that it pays all that much better than any other investment (on average). How about you?