From 1993 to 2022, the percentage of early-career college graduates with a graduate degree grew by more than one-third (31% to 42%). During this period, law school tuition more than doubled (in constant dollars), alongside substantial increases in graduate tuition more generally. So are graduate degrees—and law degrees—still worth it?

A recent NBER working paper by Joseph Altonji (Yale, Dept. Econ.) and Zhengren Zhu (Vassar, Dept. Econ.) suggests that the answer generally is yes. For professional degrees in law, medicine, and pharmacy, the answer may even be an emphatic yes. Data, analysis, and links, below the fold.

Among eighteen graduate degrees, law provided the third-highest return to earnings (59%) and cost-adjusted returns (41%). Only medicine and pharmacy provided higher returns. Similar patterns held for gains in net present earnings (41% for law) and internal rate of return (22%). Overall, these findings are consistent with prior research, and J.D. degrees generally look very strong in economic terms. This economic case for law school may become even more important for fall 2026 matriculants, when the new federal graduate student loan cap takes effect.

Altonji and Zhu take students’ pre-graduate school earnings into account in measuring the holistic cost of graduate education. In the authors’ data set, law students have higher pre-graduate earnings, relative to medical and pharmacy students. These figures dampen the authors’ calculations of all-in returns for J.D. degrees. And the cohort of law students likely shows significant variance in these pre-graduate earnings—probably more than those who pursue graduate degrees in medicine and pharmacy. Some law students come from high-paying consulting jobs, while others enter law school out of Teach for America. For students with lower pre-law-school earnings potential, the returns to legal education may be especially large (and perhaps understated in Altonji and Zhu’s paper for reasons they elaborate). Legal education continues to have great import as an economic equalizer for students—a democratizing force, as long as access is broad-based.

Student demographics also shape the economic returns to J.D. degrees. Altonji and Zhu find that, across virtually all graduate degrees and for J.D. degrees in particular, women’s returns exceed men’s. This intuitive result is nice to see so starkly in the data. Also, the returns to a J.D. are roughly half as large for Black and Asian students as for white students; these results again are consistent with prior studies. But returns for Hispanic students—the data use Census classifications—fall roughly between these extremes, though the authors “do not find strong evidence of systematic differences between Hispanic and non-Hispanic whites relative to sampling error.” This finding differs from prior research and may stem from the Texas-exclusive dataset. Either way, this result warrants further analysis—and bears directly on one of today’s most pressing access questions for legal educators.

The authors make a series of subsidiary points about various inputs in the economic returns to graduate degrees. For example, the returns to a J.D. degree increase linearly and significantly by the degree-granting institution’s U.S. News ranking—more so than for most other graduate degrees. Although not highlighted by the authors, variance in economic returns appears smaller for higher-ranked schools than for lower-ranked schools. Moreover, across J.D. holders, earnings tend to start high and stay high, as opposed to fields such as medicine with a multi-year ramp-up to top salaries. As a bottom line, J.D. degrees from higher-ranked law schools generally represent a low-risk, high-reward proposition. (Other important findings are that college GPAs predict higher returns to a J.D., so all schools may want to revisit undergraduate GPA in their admissions processes.)

Finally (and particularly relevant for TaxProf Blog readers), the authors estimate the returns to graduate degrees in taxation—presumably at the master’s level and not an LL.M. Although only about half as lucrative as as a J.D., these degrees essentially double students’ earnings from $55,000 to almost $110,000. These data should help make the case for taxation—and tax law—as areas of specialization for students.

Joseph Altonji (Yale, Dept. Econ.) & Zhengren Zhu (Vassar, Dept. Econ.), Do Graduate Degrees Pay Off?, PEER Center (Mar. 2026) (including an outstanding chart):

[W]e find that, on average, graduate programs increase students’ earnings by around 17 percent. However, the returns to earnings differ widely across fields, with professional degrees in medicine (MD) and law (JD) and master’s degrees in business administration (MBA) yielding 110 percent, 59 percent, and 16 percent returns . . . .

[A]ccounting for the costs of enrollment and foregone earnings while students are in school is important. . . . For example, a JD program, which takes three years, has relatively high tuition and low earnings during enrollment, resulting in a substantially lower (but still high) adjusted return. . . .

[W]e explore how the returns to graduate degrees differ across student and program characteristics. Generally, earnings effects are higher for women, lower for part-time students, and higher for students from lower-paying undergraduate majors. We also find that JD and MBA programs ranked highly in the U.S. News & World Report rankings tend to have higher returns than lower-ranked programs. . . .

Joseph Altonji (Yale, Dept. Econ.) & Zhengren Zhu (Vassar, Dept. Econ.), Returns to Specific Graduate Degrees: Estimates Using Texas Administrative Records, NBER Working Paper 33530 (Feb. 2025):

We estimate causal effects of 121 graduate degrees on log earnings. The returns average 0.159 but vary widely across fields, with a standard deviation of 0.176. Experience profiles of the returns also vary and are particularly steep for medicine. Internal rates of return, which account for program length, tuition, and in-school earnings, are sizable but vary less across fields. Earnings effects are higher for women, lower for part time students, and depend on undergraduate major. Students from lower-paying undergraduate majors benefit more from an MBA or JD. School specific returns are higher for higher ranked JD and MBA programs.