Abstract

http://ssrn.com/abstract=2250585
 


 



The Economic Value of a Law Degree


Michael Simkovic


University of North Carolina at Chapel Hill School of Law; Seton Hall Law School; Harvard Law School - John M. Olin Center for Law and Economics

Frank McIntyre


Rutgers Business School Newark and New Brunswick

April 13, 2013

HLS Program on the Legal Profession Research Paper No. 2013-6

Abstract:     
Legal academics and journalists have marshaled statistics purporting to show that enrolling in law school is irrational. We investigate the economic value of a law degree and find the opposite: given current tuition levels, the median and even 25th percentile annual earnings premiums justify enrollment. For most law school graduates, the net present value of a law degree typically exceeds its cost by hundreds of thousands of dollars.

We improve upon previous studies by tracking lifetime earnings of a large sample of law degree holders. Previous studies focused on starting salaries, generic professional degree holders, or the subset of law degree holders who practice law. We also include unemployment and disability risk rather than assume continuous full time employment.

After controlling for observable ability sorting, we find that a law degree is associated with a 60 percent median increase in monthly earnings and 50 percent increase in median hourly wages. The mean annual earnings premium of a law degree is approximately $53,300 in 2012 dollars. The law degree earnings premium is cyclical and recent years are within historical norms.

We estimate the mean pre-tax lifetime value of a law degree as approximately $1,000,000.

A powerpoint presentation version of this article is available at: http://ssrn.com/abstract=2270175.

Number of Pages in PDF File: 68

Keywords: Economic Value of a Law Degree, Law School Crisis, Human Capital, Labor Economics, Valuation, Tamanaha, Schlunk, Empirical, Earnings, Wage, Work Hours

JEL Classification: C1, I2, J24, J31, J44, J6, J7, K4, L31

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Date posted: April 14, 2013 ; Last revised: December 3, 2013

Suggested Citation

Simkovic, Michael and McIntyre, Frank, The Economic Value of a Law Degree (April 13, 2013). HLS Program on the Legal Profession Research Paper No. 2013-6. Available at SSRN: http://ssrn.com/abstract=2250585 or http://dx.doi.org/10.2139/ssrn.2250585

Contact Information

Michael Simkovic (Contact Author)
University of North Carolina at Chapel Hill School of Law ( email )
Van Hecke-Wettach Hall, 160 Ridge Road
CB #3380
Chapel Hill, NC 27599-3380
United States
919-537-3701 (Phone)

Seton Hall Law School ( email )
One Newark Center
Newark, NJ 07102-5210
United States
Harvard Law School - John M. Olin Center for Law and Economics ( email )
Cambridge, MA 02138
United States
Frank McIntyre
Rutgers Business School Newark and New Brunswick ( email )
111 Washington Avenue
Newark, NJ 07102
United States
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