Costs and benefits of a formal academic qualification beyond the PhD

In many Western and Eastern European countries, the habilitation is the highest formal qualification awarded by universities, ranking above the doctorate. Despite its central role in the European higher education system, little is known about the career trajectories of those who have obtained this degree. This paper systematically analyzes the career trajectories of scientists and scholars who have completed a habilitation in Germany, comparing these to those of individuals who did not complete a further degree after their PhD. To do so, linked social insurance data from a period of 2 years prior to 15 years after receiving the doctorate are used. My analysis reveals the substantial monetary costs of pursuing an additional qualification after the PhD. The empirical findings indicate that the benefits of an additional qualification beyond the PhD are primarily non-monetary, for example having a cognitively demanding and challenging job requiring a high level of education, and an increased likelihood of employment within the academic sector. These findings may indicate that beyond a certain level of education, and with an already fairly strong integration into the labor market, non-financial aspects of work could become more significant to individuals than income maximization.