Should we be alarmed by this development? Yes, if "human capital" - a population with a high level of knowledge and skills - is important, both for individuals and for the country. If, as we are often told, students go to college to get a job, they too should want to work harder. Here's why:
The NLSY79 includes data on time use in college and long-run wages, allowing us to combine time-use data from students who were in college in 1981 with subsequent wage data for these students at two-year intervals from 1986 to 2004. We find that postcollege wages are positively correlated with study time in college. The increase in wages associated with studying is small in the early postcollege years, but it grows over time, becoming large and statistically significant in the later years. By 2004, one standard deviation in hours studied in 1981 is associated with a wage gain of 8.8 percent. We do not claim to have proved a causal effect, but we conclude--consistent with common sense and the intuitions of educators--that increased effort in college is associated with increased productivity later in life.