Is there a PhD premium in The Netherlands (or anywhere)?

This is one of the most depressing student a PhD student always faces. Hey mate, what are you going to get after doing a PhD? And the head sulks and head fumes as there is no answer…:-)

Doing a PhD at one of India’s most elite B-schools one sees this happening right in front of you. The MBA students keep telling you about their great summer placement, final placement, rupee salary vs dollar ones and so on. And as a PhD student you can only look as if your world is very different and these things do not apply to you..

Anyways. got this email from CPB-Netherlands where there was a seminar on this topic. It seems there is hardly any premium for doing PhD in Dutchland..

The number of PhD defenses in The Netherlands has risen sharply over the last decades – by more than seventy percent since 2000. To defend a PhD thesis successfully is a great achievement to the individual. But to what extent will a young doctor benefit from this achievement in terms of labor market outcomes? In this paper we investigate the individual returns to a doctorate education in The Netherlands over the first twenty years of a career. We find that, compared to especially Germany and Switzerland, the PhD premium in terms of income is relatively low in the Netherlands. The first twenty years after their Master graduation, Dutch PhDs earn on average less than comparable peers with a masters degree.

Our unique dataset enables us to study the dynamics of the (negative) PhD premium. The income gap is largest in the first years after graduation and closes shortly before the twenty year period terminates. This pattern suggests that there may be a small positive PhD premium over the entire career. The individual returns strongly differ by sex and by field of study. Female PhDs actually earn more than Master graduates in the first twenty years after graduation, on average 9 percent more, whereas male PhDs earn on average 8 percent less than their counterparts. The positive income premium for women is partly driven by the fact that female PhDs work more hours than Master graduates.

Having a PhD in Business or Economics yields the largest negative returns, whereas the picture is less negative for PhDs who graduated in Humanities and (other) Social Sciences. In terms of employment and dependency on social benefits, PhDs and Masters on average have similar experiences during the first twenty years of their career.

Surprisingly, despite the strong increase in PhD defenses and the stable number of permanent positions in academia, young doctors were just as likely to obtain a position in academia in 2010 as those that defended their thesis in 1995. We believe this can be explained by both the strong increase in post-doc positions and the strong increase in foreign PhD students in The Netherlands, who are more likely to leave the Netherlands after their defense.

Depressing stuff..It is like that inverted U-curve where there is some premium initially and then it declines..

In recent years has been the surge in masters level programs especially MBA and employers likeliness for the same..Just do a MBA from a reputed place and reap the premium all your life….

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4 Responses to “Is there a PhD premium in The Netherlands (or anywhere)?”

  1. Loknath Says:

    Sad but true more or less all around the world. I blame the dumb ass semi literate clueless ladies and gents in Human Resource departments where it all begins, if not ends. Because they decide who is adequately qualified based on the job description.

    This is a perception issue. I think employers, managers and entrepreneurs who are very unlikely to be PhD’s themselves get scared at the idea of hiring PhDs for reasons that can only be misplaced.

    Everybody knows the value a great Engineer / techno analysts bring to the table but once he/she discovers that half baked dickheads with MBA’s from some cock universities are making twice or thrice as much sitting all day in glass cabins, these good Engineers who usually work 7 days a week, get demotivated and nurture dreams of getting an MBA somehow. It does not add any damn value but his/her salary doubles up for producing so little of economic consequence post an MBA. I have worked with all kinds of minds in all kinds of places and one consistent thing I note is good engineers incl. those with PhD’s from technical disciplines were more dependable than the MBA pests. I say technical because I can only talk about it. I am sure the same applies to liberal arts as well.

    I can write a whole theory on this some other time.

    Someone must break this trend. Public debates are a must.

  2. Loknath Says:

    Until as recently as mid 90’s Germany and Swiss didn’t even have the notion of MBA as worth an education. That explains why these two countries are stable economies on who the whole EU depends on. Where people produce stuff (or as economists like to call it “widgets”). Its only recently some schools started offering MBA courses but most takers here are again from bogus nations like India and China.

  3. Aryan Says:

    I can for sure say it you have a great complexity towards people who have done ph.d. I can gurantee that you have an underlying regret that you have not done ph.d. Ask your conscience and you will get the answer. Ph.D is not money. It is pursuit for Knowledge. It is not done to write blog entry. It is done to further the knowledge. Tell me how many articles/books by economist you have read those who do not have Ph.D. One learns how to ask right questions, how to probe a question in systematic fashion, how to link to theory to empirics…and a whole lot of things. Please enrol yourself in Ph.D and get rid of your complexity.

  4. Loknath Says:

    Aryan,

    If your reply was intended for me then I must say you are bang on when you say PhD is not about money. I did not say that PhD is about money. In fact I don’t even have a Master’s degree. The author says PhD’s are not only underpaid but sidelined when it comes to hiring, vis-à-vis the MBA counterparts and I concur with him that this is a ww phenomenon.

    I firmly believe that the complex is in the minds of hiring managers who are probably barely literate. May be some cock MBA’s I referred above. When many jobs mention they need MBA’s from premier institutes, they might as well mention PhD’s who demonstrate fundamental knowledge of the domain are also welcome. The PhD may or may not apply but it conveys a message that the firm regards PhDs if not higher, atleast at par for the job in question. End of the day a PhD is human too and he/she needs money to buy a home, a car and wife. I also did not say that all MBA’s are useless but I hold firm to the fact that 99% of the MBA’s are SUBSTITUTABLE in corporate world. They may be well dressed and politically correct people esp. if they come from blessed pedigrees but their knowledge in most cases is way too shallow even in their area of work. They talk poetry when the job needs deep analysis of business issues and lots of homework. Most just shamelessly walk in and banter something in meetings. Leadership is another ball game and that does not need an MBA or a PhD. They are a different breed of people. I am not touching that right now.

    In my 15 years of working life, I have not seen a single MBA who CREATED something or even contributed patiently to such an exercise by sitting in one place for 15 hours. Those who are good were good by virtue of their human interactions and good listening skills. I DID and did many times over and I ALSO got paid more than such people but that doesn’t mean I am any less human. I don’t mean to blow my trumpet because I did not cite my case to substantiate what Amol mentioned.

    I do not harbor a complex of not being a PhD because the only other thing I do is learn stuff on just about anything on the internet.. even if it means reading 10 hours a day on weekend. but I wish I could do one just for the sake of validating my knowledge. It doesn’t matter how many articles a PhD writes or how many people read them. What matters is attitude and humility that comes from quest for truth, nothing but truth.

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