The Wage Effects of Being Raised in the Catholic Religion

American Journal of Economics and Sociology, The, July, 2000 by Bradley T. Ewing

BRADLEY T. EWING [*]

Does Religion Matter?

ABSTRACT. This paper provides new empirical evidence about the existence of a Catholic wage premium. A simple allocation-of-time model provides two explanations for the observation that those persons raised in the Catholic religion earn more than their non-Catholic counterparts. The Catholic religion may add to a person's stock of human capital and/or it may act as a signal of desirable labor market characteristics such as discipline, honesty, trustworthiness, and high motivation.

I

Introduction

WHILE MUCH HAS BEEN WRITTEN about the effects of Catholic schooling on educational attainment and, to a lesser extent, earnings, it is surprising that little research has explicitly addressed the effect that being raised in the Catholic religion has on future wages. This paper examines the wage effects of persons who were raised in the Catholic religion. The paper is motivated by the work of Hulsman (1999) who discusses a rational theory of the division of labor in the context of the Christian faith and the debate over the benefits of Catholic schooling (Sander 1996; Neal 1997).

The effects of Catholic secondary schooling on high school and college graduation rates and future wages was examined by Neal (1997), who concluded that Catholic schools are not superior to public schools in general. His results indicate that there are dramatic positive effects of Catholic high school education for urban Blacks in terms of graduation rates and future earnings, and attributes this to the lower quality of urban public schools. The effects for urban Whites are much less dramatic, and no wage effects are found. Sander (1996) looked at the impact of Catholic grade school education on academic achievement. Examining the scores of non-Hispanic Whites on tenth grade standardized tests, Sander determined that a positive Catholic grade school effect is driven by non-Catholics who attend Catholic schools. Sander and Krautman (1995) studied the impact that Catholic schooling has on dropping out of high school and educational attainment, paying particular attention to the effect of selection into the Cat holic school sector. Their evidence suggests that sophomores in Catholic high schools are more likely to graduate with their class than sophomores in non-Catholic schools, and that Catholic high school seniors are more likely to acquire additional schooling than are non-Catholic seniors, if selection is taken into account. Evans and Schwab (1995) compare the effectiveness of public and Catholic schools using information on high school completion and starting college as measures of school quality. They do not find evidence of selection bias and conclude that attending a Catholic high school raises the probability of finishing high school and beginning college.

The common theme in all of the above mentioned papers is the study of the impact of Catholic schooling on either education or labor market attainment. A Catholic education may have positive benefits of the type that are typically rewarded in the labor market; however, it is not clear if actually being raised in the Catholic religion has any impact on realized future earnings. I examine this issue, and my results indicate that after controlling for standard human capital, institutional, and demographic variables that are also known to affect the wage a person receives, a substantial earnings premium exists for those person who are identified as being raised in the Catholic religion. Explanations for a Catholic wage premium are provided in the context of a simple allocation-of-time model, and the results and implications are discussed.

II

Data, Methodology, and Empirical Results

THE DATA ARE FROM the National Longitudinal Surveys of Youth (NLSY) which has interviewed respondents annually from 1979 to present. The initial wave contained 12,686 individuals between the ages of 14 and 21. My sample consists of 3527 individuals who worked full-time for pay in the nonagricultural, nonpublic sector in the year prior to the 1990 wave.

I am interested in the future effects of being raised in the Catholic religion. Workers are identified as being Catholic, Jewish, Protestant, of some other religion, or of no religion as described below. The 1979 wave asked the respondents "In what religion were you raised?" This definition of religious affiliation, or upbringing, is asked at a time when the respondents were still relatively young, between the ages of 14 and 21, but old enough to have developed a sense of identity and to have attached themselves to a particular faith, if any. As such, it does not reflect whether or not the person is a practicing Catholic, Jew, Protestant, etc. in 1990, the year under investigation. Unfortunately, that information does not exist in the NLSY. The variable Catholic is constructed such that it equals 1 if the respondent was raised in the Catholic religion and 0 otherwise. The variable Jewish is constructed such that it equals 1 if the respondent was raised Jewish and 0 otherwise. The variable Protestant is const ructed such that it equals 1 if the respondent was raised as a Protestant and 0 otherwise. The variable Other Religion is constructed such that it equals 1 if the respondent was raised in another religion and 0 otherwise (e.g., Moslem). [1] Finally, I define the binary variable No Religion as equal to 1 if the respondent reported having no religion and 0 otherwise.