The PhD Premium: Diverging Occupational Returns to the PhD Credential in 20 European Countries

Abstract In recent years, the number of PhD titles awarded has increased globally, as it did in most countries. What is the relationship between such expansion and the occupational condition of PhDs? Is there a PhD premium, that is an occupational advantage of PhD holders with respect to college graduates? In this paper, we provide empirical evidence for 20 European countries by estimating two-step models on European Labor Force Survey data (2009–2020). Our results show that the association between PhD expansion and returns to the title changes depending on the outcome considered. Concerning income, no significant associations are observed, whereas concerning the probability of becoming a professor, there is a negative association: where there are more PhD holders, the PhD premium decreases. Conversely, regarding the probability of obtaining a nonacademic good job, there is a positive association between the participation rate and the PhD premium. Controlling for expenditures in Research and Development (R&D) adds detail to the picture: the proportion of title holders drives the negative association concerning the probability of becoming a professor, while expenditures in R&D drive the positive association concerning the probability of getting a good job outside academia.