The premise of this study is that long term salary attainment for post secondary school graduates is explained partly by academic preparation and partly by matching. While educational status and general academic ability are key predictors of salary attainment, we argue that job congruence-the matching of talents to task-are also important. Both factors are directly related to the career and to the educational attainment of students as they enter post secondary education, and have significant policy implications for ensuring their earnings potential.
This study seeks to combine a widely held view of how earnings are related to education and job tenure with the notion that earnings are also associated with the quality of an individual’s job preferences. Specifically, we use the empirical model presented in Mincer (1974) as a benchmark in order to explain the variation in earnings. This specification has been widely utilized in the economic literature (Weisbrod and Karpoff, 1968; Ashenfelter and Mooney, 1968; Hansen, Weisbrod and Scanlon, 1970; Paglin and Rufolo, 1990; Blackburn and Neumark, 1992; Grogger and Eide, 1995; Card, 1998). The Mincer model provides a benchmark which enables us to isolate the effects of academic achievement, as measured by ACT scores, as well as the effect of job congruence.
Closely related to job congruence is the notion of over education and educational mismatches. There is an extensive literature which relates over education to labor-market outcomes such as earnings (Allen and van der Velden, 2001), job turnover (Topel, 1986; Lentz and Mortensen, 2007; Teulings, 2007), occupational choice (Viscusi, 1979), and job satisfaction (Tsang and Levin, 1985). These papers establish a clear connection between individual earnings and match quality. The congruence measure used in this study provides an alternative measure of match quality which can be introduced to this branch of the literature.
Turning to academic preparation, past research examines the Armed Services Vocational Aptitude Battery (ASVAB) test as a measure of general intelligence as part of the National Longitudinal Survey of Youth (NLSY). This ten scale measure of a range of cognitive abilities is associated with salary attainment within the NLSY sample regardless of education level. An alternative view is to examine academic achievement level, or the degree to which individual students have mastered the range of college and workforce readiness areas. This is the approach ACT has used when constructing its standardized achievement test based on Mathematics English, Science, and Reading scales. In particular, the ACT is designed to measure the degree to which students have mastered college readiness using a national curriculum survey of high school and college practices. A composite score on the ACT (based on these four subtests) is associated with college academic and persistence out-comes (Noble and Sawyer, 2002), and is a commonly held selection variable for college admissions. ACT scores are a highly reliable and valid measure of academic achievement, and as such is an important antecedent of salary attainment because it reflects individual achievement regardless of institutional and grading practice differences.
Another emergent factor relates to job mobility, and whether individuals stay or change careers. Perez and Sanz (2005) distinguishes between job movers and stayers, and between voluntary and involuntary movers. One reason individuals are likely to change jobs relates to what the workforce adjustment literature (Dawes and Lofquist, 1984; Tinsley, 2000) details as person-environment congruence (P-E). P-E congruence posits that the degree to which an individual’s interests, values, and abilities match or are congruent with an occupation’s work demands and reward system the greater the degree of occupational satisfaction, tenure, and production. Put another way, an individual worker fulfills work requirements in exchange for financial, social, and psychological rewards. The greater the fit the likelier positive individual and work outcomes. There is a significant research literature detailing several ways of measuring P-E congruence and demonstrating the relationship between variants of this multidimensional construct and work outcomes (cf. Kristof-Brown, Zimmerman, and Johnson, 2005).
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