Investment in education enables individuals to increase their future earnings and enhance their experience and productivity in the labor market. Higher education leads to increase in skills and hence higher wage. This study attempts to study the earnings differential for specific college degrees, and measures the wage effect from various educational degrees from the annual demographic Current Population Survey (March 1995–2007). The assumption is made that higher education is an important factor, along with experience, regions of residence, race, occupation and industry in contributing to the returns to educational investment.

The college earnings differential for South Dakota is estimated relative to high school workers for two-year degrees (vo-technical and associate of arts), four-year (bachelors of Arts and Science), and advanced degrees (masters, PhD, and professional). The South Dakota results are compared to the national labor market as well as surrounding states in the north-central region (Iowa, Minnesota, Montana, North Dakota, Nebraska, and Wyoming). The results show that the quantity of education is a major determinant of wage returns to schooling across gender and race. The South Dakota wage effect from two-year, four year and masters’ degrees are generally lower than the national estimates, but similar to the smaller surrounding states (Montana, North Dakota, Nebraska, and Wyoming). The estimated wage effect for PhD and professional degrees are similar to the national results. The larger surrounding states (Minnesota and Iowa) have estimated college wage effects that are similar to the national labor market.