Lifetime Earnings Premium of Higher Education: Evidence from the 40-Year Career of the 1951–1955 Birth Cohort in Hong Kong

Abstract The global trend of higher education expansion has increasingly transformed knowledge-based economies, with Hong Kong exemplifying this phenomenon through a dramatic rise in university participation. Nevertheless, ongoing scholarly discussions question the economic returns to university education. The varied research outcomes may be attributed to inadequate examination of long-term earnings trajectories. This study addresses this gap by constructing a pseudo-longitudinal panel, through integrating multiple cross-sectional datasets, to examine the lifetime earnings premium over a 40-year career of the birth cohort of 1951–1955 in Hong Kong. Results reveal that the earnings premium of university education for this cohort is modest during their late 20s but increases significantly after age 30, continuing to grow through early and middle career stages. Even during challenging economic challenges, such as the Asian Financial Crisis and the SARS epidemic in their late 40s and early 50s, university degree holders from this cohort sustained an earnings premium, albeit with short-term fluctuations. Key findings on the cumulative advantage of higher education and its resilience during economic disruptions contribute to the theoretical understanding of how educational credentials systematically generate and perpetuate economic inequalities over time and also provide valuable policy insights into long-term human capital investment and educational equality for Hong Kong and other societies experiencing higher education expansion. Lastly, the pseudo-panel approach utilized in this study holds broad applications in social science research, particularly for investigating long-term social phenomena in societies where longitudinal data are scarce.