Why do College Graduates Earn Higher Wages?

In 2007 the typical college graduate earned roughly twice as much as the typical high school graduate. There are two explanations for the college premium. The first explanation is based on supply and demand analysis. A college education provides the skills necessary to enter certain occupations, so a college graduate has more job options than a high-school graduate. Both high-school grads and college grads can fill jobs that require only a high-school education, so the supply of workers for these low-skill jobs is plentiful, and the equilibrium wage for these jobs is low.