The Economic Value of a Law Degree, Powerpoint Presentation

2013 American Law & Economics Conference, Vanderbilt Law School, Nashville, Tennessee

129 Pages Posted: 26 May 2013 Last revised: 26 Nov 2014

Michael Simkovic

USC Gould 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

Multiple version iconThere are 3 versions of this paper

Date Written: May 18, 2013

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 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 73 percent median increase in monthly earnings and 60 percent increase in median hourly wages. The mean annual earnings premium of a law degree is approximately $57,200 in 2013 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.

Notes: This is a powerpoint presentation of "The Economic Value of a Law Degree" that was originally presented at the American Law & Economics Association Conference on May 18, 2013. Two drafts of the full working paper are also available on SSRN. A final version of this article has been published in The Journal of Legal Studies as Michael Simkovic & Frank McIntyre, The Economic Value of a Law Degree, 43 J. LEGAL STUD. 249 (2014). The final published version of the article can be accessed through Jstor or the JLS website.

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

Suggested Citation

Simkovic, Michael and McIntyre, Frank, The Economic Value of a Law Degree, Powerpoint Presentation (May 18, 2013). 2013 American Law & Economics Conference, Vanderbilt Law School, Nashville, Tennessee. Available at SSRN: https://ssrn.com/abstract=2270175 or http://dx.doi.org/10.2139/ssrn.2270175

Michael Simkovic (Contact Author)

USC Gould School of Law ( email )

699 Exposition Boulevard
Los Angeles, CA 90089
United States

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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