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Law School Research Papers

Are Law Degrees as Valuable to Minorities?

September 18, 2017
Photo of the New York Public Library - Stephen A. Schwarzman Building, New York, by Davide Cantelli via Unsplash

A new research paper by Frank McIntyre of Rutgers Business School and Michael Simkovic of USC Law looks at whether law degrees are less valuable for minority students.

Unsurprisingly, the researchers found that minority students tend to earn less after law school than white students:

“After controlling for observable differences, we find that a law degree is associated with approximately an 80 percent increase in earnings for whites and a 60 to 70 percent increase for minorities such as blacks, Asians and Hispanics.

The results are similar when looking only at men or only at women. In addition, whites’ higher percentage premiums are multiplied by higher base earnings than blacks’ or Hispanics’, such that in dollar terms the gaps are even more noticeable.

It is likely that at the median and even 25th percentile, law students of all races typically derive greater financial benefits from their law degrees compared to a terminal bachelor’s than the costs of those law degrees. However, minority students’ predictably lower earnings premiums indicate that they are at greater risk than other students of losing out financially from law school.

There are important limitations to our study. While differences in total earnings by race are well documented, and we now have evidence in differences by race in law earnings premiums (the financial benefits of legal education), the reasons for these differences are not well understood and likely include a combination of factors. Another limitation is that we are measuring population level differences in earnings. Individual outcomes vary, and we account only for a limited proportion of the total variance in earnings.

Nevertheless, our results suggest two things. First, attending law school is generally a better financial decision than terminating education with a bachelor’s degree, but the boost to earnings is higher for whites than for minorities. Second, differences in the financial benefits of a law degree by race appear to have diminished in recent years, particularly as between whites on the one hand and blacks and Hispanics on the other.”

One thing that was not heavily emphasized by the paper was differences in law school quality. Minorities disproportionately attend less-prestigious schools, which would obviously have an impact on earning capacity.

Another noteworthy aspect of the paper is that it excludes incomes of students born outside of the U.S. — my experience at the University of Minnesota Law School and Georgetown Law tells me that this is omitting a large portion of minority students who go on to have successful careers in the U.S. (particularly Asian students.)

This is how the researchers address these gaps:

“A second concern is that benefits to law school for whites might be in part due to the benefits conferred by attending a more selective law school, possibly because more selective institutions have more resources and spend more on instruction for each student, (Dale & Krueger, 2014; Dale & Krueger, 2002) or because more selective law schools have a stronger brand name or a more successful alumni network. (Oyer & Schaefer, 2009; R. Sander & Bambauer, 2012)

Law schools admit students and allocate merit aid based primarily on standardized test scores and undergraduate grade point averages, which tend to be higher for whites than for blacks or Hispanics.

We considered this possibility using recent data from the ABA section on legal education about the race of J.D. recipients at each ABA approved law school. A higher proportion of blacks and Hispanics than whites graduated from the bottom quartile of law schools. However, a higher proportion of Asians than whites graduated from the top half of law schools. Since all three minority groups receive less benefit from their law degrees than whites, the reasons for racial differences in law earnings premiums are not well understood.

Some other possible reasons which are difficult to test empirically include differences in complementary social and family connections, different preferences for types of legal work or types of employers, racial discrimination by employers or clients, or differences in earnings ability and productivity. As noted above, except for the black-white lawyer earnings premium in the public sector, controls for full-time employment status, geography, and for public sector, private sector, or legal services industry employment do not alter racial gaps in earnings much.”

More: McIntyre, Frank and Simkovic, Michael, Are Law Degrees as Valuable to Minorities? (September 15, 2017). International Review of Law and Economics. (h/t TaxProf Blog.)

Photo: Davide Cantelli.

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