26/11/2019

What are master's and doctoral degree holders for, and how much do they earn?

Foto: Freepik

Reproduction from the IMPA Science & Mathematics blog, from O Globo, coordinated by Claudio Landim.

Ricardo Takahashi , Full Professor in the Department of Mathematics at the Federal University of Minas Gerais.

Sometimes we hear that someone has a "postgraduate degree." It's relatively common, for example, for newspapers or TV to interview people who have a master's or doctoral degree and who work at a university or research center when the topic of the report is related to science or technology. However, in our country, these people are relatively rare, to the point that a large part of Brazilians don't personally know anyone like that. Therefore, our perception of who masters and doctors in Brazil are and what they do – our "scientists" – ends up failing to capture a picture with interesting aspects that have something to say about our future as a country.

First, it's necessary to explain what masters and doctoral degrees are. When a person obtains a bachelor's degree in any field, it usually means they have acquired knowledge of the basic principles of that field and are able to solve typical problems within that profession. A medical graduate, for example, will be able to diagnose the most common diseases and prescribe their treatment, while a mechanical engineer graduate will be able to understand how the most common machines work, how to install them, operate them, and design them.

A person pursuing a master's degree will focus on a more restricted sub-area. A doctor, for example, might specialize in dermatology or cardiology. A mechanical engineer might specialize in thermal systems or automotive systems, among countless other options. By pursuing a master's degree, a person delves deeper into a topic and comes to understand the limits of existing knowledge on that subject. A master's degree holder is expected to understand the extent to which existing techniques are effective and why they cease to be valid for slightly different types of problems. Thus, a master's degree holder is, in principle, someone capable of appropriately utilizing the limits of existing knowledge in their professional practice. Technology companies, advanced medical centers, business consulting firms, and many other types of "knowledge-based" economic activities would likely not exist without a certain number of people with master's degrees working in them.

When pursuing a doctorate, a professional distinguishes themselves from someone with a master's degree because, in addition to identifying the boundaries of a field of knowledge, they must also be able to identify gaps in that knowledge and learn how to fill them. In other words, they must learn how to conduct research, generating new knowledge. A doctor, upon pursuing a doctorate, will, for example, invent a new type of treatment for a disease to increase the chances of a cure. A mechanical engineer will create a new material for the construction of certain types of parts, making them lighter or more resistant. These are the so-called "technological innovations," whose presence or absence in a country's economic activity basically explains why it is rich or poor.

Some students I supervised during their master's and doctoral studies told me that when they told their families they would continue studying even after obtaining their undergraduate degree, they had to answer the question: "But why?" A plausible answer, which usually satisfied the parents, was: "It's necessary to be able to become a university professor." Even within academia, various opinions circulate about what people with postgraduate degrees do, some contradictory and some unfounded. I often hear statements like the following:

"Companies in Brazil don't hire masters or doctoral degree holders. The only places for people with postgraduate degrees to work are universities."
"A master's or doctoral degree reduces someone's chances of getting a job. If you want to work in the private sector, don't pursue postgraduate studies."
"People who pursue postgraduate studies spend many more years studying only to end up earning less than those who didn't."

Let's look at the data. We will use a study carried out in 2016 by the Center for Management and Strategic Studies (CGEE) [1]. In Brazil, in 2010, there were a total of 516,983 people who had studied up to a master's degree, and 109,953 who had obtained a doctorate. These numbers corresponded to 0.5% and 0.1% of the Brazilian population aged 25 to 65, respectively. This is undoubtedly very little compared to the numbers in countries such as France (10% and 1%, respectively), Germany (12% and 1%) or the United States (11% and 2%).

A question that young people often ask themselves when evaluating how much effort and time they will invest in their education is: is it financially worthwhile? In the Brazilian case, contrary to what many people imagine, studying is very worthwhile: those who have completed a bachelor's degree receive salaries on average 170% higher than those who only completed high school. Those who have a master's degree earn, on average, 84% more than those with only a bachelor's degree. And those who have a doctorate also receive, on average, 35% more than those with only a master's degree. The average salary of a master's degree holder in 2014 was R $ 9,719.00, while that of a doctoral degree holder was R$ 13,861.00.

But where, exactly, are these professionals with master's and doctoral degrees working? Are they only in universities? Data from CGEE indicates that 27.6% of master's degree holders and 11.4% of doctoral degree holders work in the business sector. That certainly seems like a small number. But what does this mean in terms of the employability of people with master's and doctoral degrees?

To try to assess this issue, we have indirect data that tells us something. Table 1 below shows the average salaries of masters and doctoral degree holders employed in organizations from different sectors of the economy in 2014.

Table 1: Average salary of masters and doctoral degree holders in 2014 by sector of economic activity.

Table 1, originally presented in [1], is presented here in a summarized form, with several lines omitted. In this table, masters and doctoral degree holders employed in universities are counted in the “Education” sector. Salaries in this sector, however, are lower than the average salaries of masters and doctoral degree holders. Now, assuming that business sectors hire professionals as they identify a need for their services and that salaries are basically determined by the balance between the relative scarcity of these professionals and the value generated by their presence in the company, this table seems to indicate that many companies in the listed sectors need professionals with this training. If they were not specifically needed, they could still be hired, but their salary would not be different from that of another professional with only a bachelor's degree.

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