Education is an investment in which the individual decision to acquire a higher education depends on the probability of higher future earnings potential. The economic benefit of higher education has societal implications as well, since a productive population affects the aggregate economic output of a society. Selma Hepp, of the California Association of REALTORS® and Casey Dawkins, of the University of Maryland, approach the question: Does having college or graduate education make one a more successful real estate agent?
While the relationship between education and an individual’s earnings has been explored widely in numerous professions and industries, and a positive relationship between education and earnings regardless of profession, country, or time period, research focusing on the real estate profession specifically has tried to measure the impact of such variables as education, experience, demographics, age, firm association, and previous work experience on real estate agents’ earnings. It is most often found that earnings are positively affected by education and experience.
Hepp and Dawkins focus on the relationship between post-secondary education and REALTOR® income and estimate the impact of post-secondary schooling. Using recent data on REALTOR® income from the Member Profile Survey produced by the NATIONAL ASSOCIATION OF REALTORS®, the authors model and measure whether, and to what extent, post-secondary education has on REALTOR® income. The analysis also evaluates the impact of holding an NAR certification and/or designation.
Selected Key Findings:
- For respondents with an Associate’s degree, earnings in the study were about 6 percent higher than those without any college degree.
- Those with a bachelor’s degree had about 12 percent higher incomes than those without a higher degree.
- Those with a graduate degree had about 23 percent higher income compared to those without any higher education, all else equal.
- Respondents with a doctoral degree had 23 percent higher incomes than those without a higher degree; however, the impact was not statistically significant.
- In addition to formal education, having a professional designation and/or certification further contributes to one’s income. The estimates suggest that having at least one designation adds as much as 25 percent to one’s income among respondents with equal levels of formal education.
- Similarly, having at least one certification adds 7 percent more to one’s income.
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