Dansk Center for Forskningsanalyse

Policy makers expect that increasing shares of PhDs will find employment within the private sector. However, the incentive structure for undertaking PhD education and subsequently seeking private sector employment has not been adequately assessed in the literature. This paper investigates the economic incentives for this career path of recent Danish PhD graduates. Wage premiums associated with holding a PhD compared to a master’s degree are estimated by an program evaluation approach using regression on a matched sample. Income levels three years after receipt of the PhD degree are three percent lower for PhDs than for comparable master’s degree holders. However, estimated differences for the change in income over a three year period are insignificant, thus implying that the wage gap at least diminishes slowly. The empirical results indicate that there is a lack of monetary incentives to choose private sector employment immediately after award of the PhD degree.